M/S Bharat Bidi Factory vs. State Of Uttar Pradesh And 2 Others

WTAX/4819/2025HC AllahabadGSTCNR UPHC01502780202522 September 20254 pages

AI SummaryRemanded

Facts

The writ petitioner, M/S Bharat Bidi Factory, challenged an Adjudication Order dated July 23, 2025, passed by the Deputy Commissioner, State Tax, Rampur, Uttar Pradesh, under Section 74 of the CGST Act. The petitioner contended that the order was passed in gross violation of the principles of natural justice, as no oral hearing was afforded, and adverse material was not confronted. The tax period in dispute is the Financial Year 2021-22. The petitioner argued that the date of reply was May 22, 2025, while the date of personal hearing was listed as 'NA' and preceded the reply date. The petitioner relied on a coordinate bench judgment in Mahaveer Trading Company vs. Deputy Commissioner State Tax.

Held

The Court held that the Adjudication Order dated July 23, 2025, could not be sustained in law as it was passed in gross violation of the fundamental principles of natural justice. The Court found that the petitioner was not afforded a proper opportunity of personal hearing, and the dates mentioned for reply and personal hearing were inconsistent and improper, as evidenced by the Office Memo No. 1406 issued by the Commissioner, Commercial Tax, Uttar Pradesh. The Court acknowledged that the writ petition was filed after the period of limitation for appeal but intervened exceptionally due to the violation of natural justice principles. The Court quashed and set aside the ex-parte order and directed the Department to issue a fresh show cause notice and proceed in accordance with the law. The Court noted that the appeal authority does not have the authority to remand proceedings, but in this writ petition, the direction was to issue a fresh show cause notice. The issue of whether the appeal authority can remand was expressly left undecided in this judgment.

Key Issues

1. Whether the Adjudication Order dated July 23, 2025, passed by the Deputy Commissioner, State Tax, Rampur, is liable to be quashed for gross violation of the principles of natural justice, specifically the denial of an oral hearing and non-confrontation of adverse material, thereby contravening Section 74 of the CGST Act? 2. Whether the writ petition is maintainable despite being filed after the statutory period of limitation for filing an appeal, given the alleged violation of fundamental principles of natural justice? Petitioner's Arguments: The petitioner argued that the entire initiation of proceedings was improper due to an incorrect show cause notice. They specifically highlighted that the date of personal hearing preceded the date of reply and was marked 'NA', rendering the proceedings bad in law. The petitioner relied on the judgment in Mahaveer Trading Company to support their claim of procedural impropriety and violation of natural justice. Revenue's Arguments: The judgment does not record any specific arguments made by the revenue or state respondents.

Sections Cited

Section 74

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

HIGH COURT OF JUDICATURE AT ALLAHABAD WRIT TAX No. - 4819 of 2025 Court No. - 3 HON'BLE SHEKHAR B. SARAF, J. HON'BLE PRAVEEN KUMAR GIRI, J. 1. Heard counsel appearing on behalf of the parties. 2. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner has prayed for the following substantial reliefs:- "1. Issue writ of Certiorari and any other appropriate writ, order or direction under Article 226 of the Constitution of India for quashing and setting aside the impugned Adjudication Order passed u/s 74 of the Act by the learned Deputy Commissioner, State Tax, Sector-3, Rampur, Uttar Pradesh (Respondent No. 3) vide Reference No.: ZD0907252256824 dt. 23/07/2025 along with FORM GST DRC-07 for tax period F.Y. 2021-22 (Annexure No. 1), which is made is gross violation of the principles of natural Justice; no oral hearing in the matter was afforded to the Petitioner, adverse material has not been confronted to the Petitioner resulting in a most unfair trial. 2. Issue a writ, order or direction in the nature of Mandamus commanding Revenue authorities to reconsider the case of the Petitioner, lawfully and in good-faith, in the light of submissions filed by Petitioner, and with supplying of relief upon documents and after affording due and proper opportunity of hearing." 3. Counsel on behalf of the petitioner relies on a coordinate Bench Versus Counsel for Petitioner(s) : Lokesh Mittal, Vishnu Kesarwani Counsel for Respondent(s) : C.S.C. M/S Bharat Bidi Factory .....Petitioner(s) State Of Uttar Pradesh And 2 Others .....Respondent(s) judgment of this Court in the case of Mahaveer Trading Company vs. Deputy Commissioner State Tax reported in 2024 U.P.T.C. (117) 734. Paragraphs 8, 9, 10, 11 and 12 of the said judgment are delineated below:- "8. Thus, it is established on record that on all three dates, the petitioner had been called to file its reply on the points specified in the respective show-cause notice issued. The petitioner submitted its reply on each occasion. Those replies have been extracted in the impugned order. After recording the reply submitted on 27.10.2022, the adjudicating authority has chosen to deal with the merits of the replies submitted and passed a

merit order.

It transpires from the record, neither the adjudicating authority issued any further notice to the petitioner to show cause or to participate in the oral hearing, nor he granted any opportunity of personal hearing to the petitioner.

10.

On query made, the learned Additional Chief Standing Counsel fairly submits, in light of similar occurrences, noticed in other litigation, he had apprised the Commissioner, Commercial Tax. In turn, the Commissioner, Commercial Tax, Uttar Pradesh, has issued Office Memo No. 1406 dated 12.11.2024. The same has been addressed to all Additional Commissioner to be communicated to all field formations for necessary compliance. A copy of the same has been made available to this Court. It reads as below:

The column in which date of personal hearing has to be mentioned, only N.A. is mentioned without mentioning any date.

The column in which time of personal hearing has to be mentioned, only N.A. is mentioned without mentioning time of hearing.

In some cases, the date of personal hearing is prior to which reply to the Show Cause Notice has to be submitted this is non-est and this practice has to be discontinued. The date of reply to the Show Cause Notice has to be definitely prior to the date of personal hearing.

In some cases, the date of personal hearing is on the same date to which reply to the Show Cause Notice has to be submitted-this is non-est and this practice has to be discontinued. The date of reply to the Show Cause Notice has to be definitely prior to the date of personal hearing.

In all cases observed, the date of passing order either u/s 73(9)/74(9) etc. of the Act is not commensurate to the date of personal hearing. It is trite law that the date of the order has to be passed on the date of personal hearing. For eg.,the date of furnishing reply to SCN is 15.11.2023 and date of personal hearing is 17.11.2023, then the date of order has to be 17.11.2023"

11.

In view of the facts noted above, before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings.

12.

Thus, the impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice. Here, it may be noted, the appeal authority does not have the authority to remand the proceedings."

Counsel on behalf of the petitioner submits that very initiation and the first show cause notice was improper, and therefore, the entire initiation was wrong. He further submits that the date of reply was May 22, 2025 whereas the date of personal hearing precedes the same and was "NA". In light of the same, he submits that as the authorities have not issued a proper notice, any proceeding taken thereunder is bad in law.

We have perused the judgment in the case of Mahaveer Trading Company (Supra) and, in our view, the principles laid down therein would apply in the present case. Since the show cause notice at the time of initiation itself was wrong, it was the duty of the authorities to once again issue a fresh show cause notice to the petitioner in accordance with law. Since the same has not been done, we are of the view that principles of natural justice have been violated. In spite of the fact that the writ petition has been filed after the period of limitation as prescribed under the Statute for filing of appeal, we are of the view that in exceptional cases where there is violation of principles of natural justice, this Court may intervene.

In light of the above, the ex-parte order dated July 23, 2025 is quashed and set-aside. The Department shall be at liberty to issue fresh show cause notice and proceed in accordance with law.

With the above directions, the writ petition is disposed of. September 23, 2025 DKS (Praveen Kumar Giri,J.) (Shekhar B. Saraf,J.) DEEPAK KUMAR SRIVASTWA High Court of Judicature at Allahabad

Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.