M/S Hindustan Enterprises vs. State Of Up And Another

Held

The Court held that the impugned order dated 21.8.2024 passed by the Deputy Commissioner, Sector-13, State Tax, Chetganj, Varanasi, Uttar Pradesh, could not be sustained in law as it was passed in gross violation of the fundamental principles of natural justice. The Court found the factual matrix to be very similar to the case of Mahaveer Trading Company (supra), where procedural irregularities concerning personal hearings were highlighted. The Court reasoned that before any adverse order is passed in an adjudication proceeding, a personal hearing must be offered to the noticee. The self-imposed bar of alternative remedy was deemed inapplicable in such circumstances, as it would be counterproductive to the interest of justice, especially since the appeal authority does not have the authority to remand proceedings. The ratio decidendi is that orders passed without affording a proper opportunity of personal hearing, in violation of natural justice, are liable to be quashed.

Facts

The petitioner, M/s Hindustan Enterprises, filed a writ petition challenging an order dated 21.8.2024 passed by the Deputy Commissioner, Sector-13, State Tax, Chetganj, Varanasi (Respondent No.2) under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner contended that the order was passed in violation of principles of natural justice. The Court noted that the factual matrix was similar to a previous case, Mahaveer Trading Company vs. Deputy Commissioner State Tax and another, where the Commissioner, Commercial Tax, Uttar Pradesh, had issued an Office Memo No. 1406 dated 12.11.2024 addressing procedural irregularities in adjudication proceedings, including issues with personal hearing dates and the timing of replies to show cause notices.

Key Issues

1. Whether the order dated 21.8.2024 passed by the respondent No.2 under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, is sustainable in law, considering the alleged violation of principles of natural justice? Petitioner's Arguments: The petitioner argued that the order was passed in gross violation of fundamental principles of natural justice, specifically regarding the opportunity for personal hearing. They relied on the principles laid down in the coordinate Bench judgment of Mahaveer Trading Company vs. Deputy Commissioner State Tax and another. Respondent's Arguments: The learned Additional Chief Standing Counsel for the respondents, in light of similar occurrences in other litigation, had apprised the Commissioner, Commercial Tax, who subsequently issued Office Memo No. 1406 dated 12.11.2024. This memo addressed procedural deficiencies related to personal hearings and the timing of replies to show cause notices, indicating an acknowledgment of such issues by the revenue.