M/S Gaurav Enterprizes vs. State Of U.P. And Another

Held

The Court held that the issues raised in the present writ petition are squarely covered by the adjudication made in Writ Tax No. 551 of 2023 (M/S Mohini Traders Versus State of U.P. and another). In that prior case, the Court had found that Section 75(4) of the U.P. GST Act, 2017 mandates an opportunity of hearing where a request is received or where an adverse decision is contemplated. The Court had reasoned that even if an assessee marks 'No' for personal hearing, it does not negate the authority's obligation to provide one before passing an adverse order, especially when it creates a heavy civil liability. The principle of natural justice requires authorities to ensure a real opportunity of hearing is granted. Consequently, the impugned order dated 04.02.2023 was quashed to allow the department to issue a fresh notice specifying the date of hearing and proceed in accordance with law. The matter was remitted to the respondent authority.

Facts

The petitioner, M/s Gaurav Enterprizes, is challenging an order dated 04.02.2023, which raised a GST liability under Section 74 of the Goods and Services Tax Act. This order was issued pursuant to a show cause notice dated 09.10.2022. The petitioner contends that the show cause notice is defective as it contained 'NA' in the place designated for the date of hearing, and no other opportunity for hearing was provided. The petitioner relies on a previous judgment by the same High Court in Writ Tax No. 551 of 2023 (M/S Mohini Traders Versus State of U.P. and another), arguing that the facts are identical. The respondent is the State of U.P. and another authority.

Key Issues

1. Whether the impugned order raising GST liability under Section 74 of the Goods and Services Tax Act is sustainable when the show cause notice issued on 09.10.2022 contained 'NA' in the place of the date of hearing, and no opportunity of hearing was otherwise granted, thereby violating principles of natural justice? Petitioner's contention: The petitioner argues that the absence of a specified date for hearing in the show cause notice, and the lack of any other opportunity for oral hearing, renders the subsequent order unsustainable. They rely on the High Court's decision in M/S Mohini Traders, which held that an opportunity of personal hearing is mandatory before passing an adverse order, especially when significant civil liability is involved, and that an assessee is not required to explicitly request for it. They also cite Bharat Mint & Allied Chemicals and M/S Hitech Sweet Water Technologies Pvt. Ltd. Respondent's contention: The judgment does not record any specific arguments from the respondent's counsel in this particular case, other than their acknowledgment that the issues are covered by the M/S Mohini Traders judgment.