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

Held

The Court held that the impugned order dated 26.8.2024, passed by the Deputy Commissioner, Sector-13, State Tax, Chetganj, Varanasi, Uttar Pradesh, cannot be sustained in the eyes of law. The Court found that the order was passed in gross violation of fundamental principles of natural justice. The reasoning was based on the precedent set in Mahaveer Trading Company vs. Deputy Commissioner State Tax and another, which highlighted procedural deficiencies in personal hearings, such as mentioning 'N.A.' for dates and times, scheduling hearing dates prior to reply submission dates, or on the same date as reply submission. The Court emphasized that a personal hearing must be offered before any adverse order is passed in adjudication proceedings, unless waived by the noticee. The self-imposed bar of alternative remedy was deemed inapplicable in such circumstances, as it would be counterproductive to justice. 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. The Court directed the officer to grant the petitioner another opportunity to file a fresh reply, fix a date for hearing, and pass a reasoned order within two months.

Facts

The petitioner, M/s Hindustan Enterprises, filed a writ petition challenging an order dated 26.8.2024 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 similar procedural irregularities were observed. The issue revolved around the proper procedure for personal hearings and the issuance of orders in adjudication proceedings under the GST Act.

Key Issues

1. Whether the impugned order dated 26.8.2024, passed by the Deputy Commissioner under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, is sustainable in law, considering alleged violations of natural justice principles? Petitioner's Contention: The petitioner argued that the order was passed in gross violation of fundamental principles of natural justice, rendering it unsustainable. They relied on the principles of natural justice, which mandate a fair hearing before an adverse order is passed. Respondent's Contention: The respondent, State of U.P. and Another, did not explicitly record arguments in the judgment. However, the judgment references an Office Memo No. 1406 dated 12.11.2024 issued by the Commissioner, Commercial Tax, Uttar Pradesh, which addresses procedural irregularities in personal hearings and order passing, suggesting the State acknowledged such issues can arise and sought to rectify them.