M/S Katyayani Enterprises vs. State Of U.P. And Another

Facts

The petitioner, M/s Katyayani Enterprises, filed a writ petition challenging an order dated 16.04.2024 passed under Section 73 of the U.P. Goods and Services Tax Act, 2017, for the tax period April 2018 to March 2019. A show-cause notice was issued on 20.12.2023, with a reply date of 19.01.2024, but the personal hearing column was marked 'NA'. The petitioner applied for a 30-day extension on 10.01.2024. Subsequently, an order was passed on 16.04.2024, raising a demand of Rs. 1,62,84,476/-. The petitioner contended that the order was passed without affording an opportunity of hearing, violating principles of natural justice.

Held

The Court held that the order dated 16.04.2024 passed under Section 73(9) of the U.P. Goods and Services Tax Act, 2017, was liable to be quashed and set aside for violating the principles of natural justice. The Court reasoned that while the petitioner had sought an extension and failed to file a reply, the respondent-authority also did not pass any order on the application for extension and failed to afford an opportunity of hearing prior to passing the ex-parte order. The Court relied on its previous interpretation of Section 75(4) of the Act in the case of Mahaveer Trading Company Vs. Deputy Commissioner, State Tax and another, which requires an opportunity of hearing before passing an order under Section 73(9)/74(9). The Court rejected the respondent's plea that no hearing was required in the absence of a reply, stating that a party can make submissions even without a formal reply. The matter was remanded to the Assistant Commissioner, State Tax, to afford an opportunity of hearing to the petitioner. The petitioner was granted 15 days to file a response to the show-cause notice, after which a fresh order would be passed.

Key Issues

1. Whether the order dated 16.04.2024, passed under Section 73(9) of the U.P. Goods and Services Tax Act, 2017, is liable to be set aside for violation of principles of natural justice due to non-affordance of an opportunity of hearing, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that despite filing an application for extension of time to file a reply, the Assessing Authority did not respond, reject the application, or indicate a next date for hearing. Furthermore, the original notice explicitly denied personal hearing, and Section 75(4) of the Act mandates an opportunity of hearing, which was not provided. The petitioner also claimed the order was arbitrary on merits. Respondent's Arguments: The respondent contended that the petitioner sought 30 days' time to file a reply, but no reply was filed even after the expiry of this period. Therefore, the plea regarding the non-provision of an opportunity of hearing is untenable, as there was no occasion to provide a hearing in the absence of any reply. The petition, thus, deserves dismissal.