M/S Kailash Traders Thru. Its Proprietor Sahil Singh vs. State Of U.P. Thru. Prin. Secy. Tax And Registration Lko. And 2 Others
Original PDF →Facts
The petitioner, M/s Kailash Traders, claims to have closed its business in 2019 and obtained cancellation of its GST registration in 2021. Despite this, a notice under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017, was issued on May 22, 2024. The petitioner alleges that due to the cancellation of registration, they were unaware of this notice. Consequently, a final assessment order was passed under Section 73 on August 17, 2024, without any personal hearing. A consequential demand order dated February 1, 2025, was also issued. The respondent's counter-affidavit did not deny the petitioner's assertion of registration cancellation and admitted that a personal hearing was not granted due to lack of time, as the case was approaching the limitation period.
Held
The Court found the respondent's explanation for not granting a personal hearing to be an admission of a blatant abuse of power by the tax authorities. The Court expressed shock and surprise at the proper officer's response, which indicated that a final assessment order was passed without providing an opportunity of hearing solely because the case was approaching the limitation period. The Court held that this action violated the principles of natural justice. Consequently, the impugned assessment order dated August 17, 2024, and the consequential demand order dated February 1, 2025, were quashed. The writ petition was allowed.
Key Issues
1. Whether the final assessment order passed under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017, is vitiated by a violation of the principles of natural justice, specifically the right to a personal hearing, when the petitioner's GST registration had been cancelled prior to the issuance of the notice? Petitioner's Contention: The petitioner argued that since their business was closed and GST registration cancelled in 2021, they were unaware of the notice issued in 2024. The subsequent final assessment order, passed without any personal hearing, is therefore illegal and arbitrary. They contended that the authorities failed to serve the notice and provide an opportunity to be heard, which is a fundamental requirement of natural justice. Respondent's Contention: The respondent, through their counter-affidavit, admitted that a personal hearing was not granted due to lack of time, as the case was becoming time-barred. They stated that an ex-parte order was passed under Section 73 because of this time constraint.
Sections Cited
Section 73
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC-LKO:42628-DB Court No. - 2 Case :- WRIT TAX No. - 403 of 2025 Petitioner :- M/S Kailash Traders Thru. Its Proprietor Sahil Singh Respondent :- State Of U.P. Thru. Prin. Secy. Tax And Registration Lko. And 2 Others Counsel for Petitioner :- Amar Mani Tiwari,Prabhat Counsel for Respondent :- C.S.C. Hon'ble Rajan Roy,J. Hon'ble Manish Kumar,J. Heard Sri Amar Mani Tiwari, learned counsel for the petitioner, learned Standing Counsel for the State. The petitioner claims that he had closed his business in 2019 and had also got his registration under the Uttar Pradesh Goods and Services Tax Act, 2017 cancelled in the year 2021, but a notice under Section 73 of the Act, 2017 has been issued on 22.05.2024. On account of the aforesaid fact, he did not come to know about the said notice and without serving it and without any personal hearing, final assessment has been made under Section 73 of the Act, 2017, which is impugned herein. In the counter affidavit, the assertion of the petitioner in para 3 & 7 of the writ petition regarding cancellation of its registration under GST in 2021 has not been denied and in para 11, it has been stated as under:- "
That in reply to the content of paragraph 09 of the writ petition, it is submitted that since the case was about to be time barred, due to lack of time, the date of personal hearing was not given and an ex- parte order was passed under Section 73." We are surprised and shocked at the response of the proper Officer that he passed a final assessment order under Section 73 without opportunity of hearing as the case was becoming time barred, therefore, due to lack of time, personal hearing was not given and an ex-parte order was passed under Section 73. It is nothing but admission of a blatant abuse of power by the Tax authorities. The impugned assessment order dated 17.08.2024 is quashed. Consequential action in the form of a demand order dated 01.02.2025 is also quashed. Writ petition is accordingly allowed. [Manish Kumar, J.] [Rajan Roy,J] Order Date :- 24.7.2025/Nitesh NITESH KUMAR TEWARY High Court of Judicature at Allahabad, Lucknow Bench
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.