M/S Integra Micro Systems Private Limited Lko. Thru. Authorized Signatory vs. State Of U.P. Thru. Prin. Secy. Deptt. Of State Tax Lko. And 2 Others
Original PDF →Facts
M/s Integra Micro Systems Private Limited (the petitioner) challenged two orders. The first, dated 25.03.2023, was passed by respondent no. 3, creating a demand under Section 74 of the GST Act for Rs. 2,11,02,438/-. The petitioner claimed a bonafide mistake in availing Input Tax Credit (ITC) for the financial year 2017-18, which was not utilized, and had filed a corrected return. A show-cause notice was issued on 21.06.2022. The petitioner sought adjournment due to advocate's illness and requested a personal hearing. Despite this, an order was passed without granting a hearing. The second order, dated 04.12.2024, dismissed the petitioner's appeal against the first order as being beyond limitation.
Held
The Court held that the original order dated 25.03.2023, passed under Section 74 of the GST Act, was liable to be quashed. The Court found that the order was contrary to the mandate of Section 75(4) of the GST Act, which requires an opportunity of hearing to be granted when an adverse decision is contemplated against a person. This non-compliance also violated the principles of natural justice. The Court noted that the show-cause notice and reminder notices indicated 'NA' for the date, time, and venue of personal hearing. The Court relied on its previous decision in Party Time Hospitality Prop. Smt. Punita Gupta Lko. v. State Of U.P. & 2 Others. Consequently, the order dated 25.03.2023 was quashed. As a result, the subsequent order dated 04.12.2024, which dismissed the appeal as time-barred, was also quashed. The matter was remanded to respondent no. 3 to pass fresh orders after granting the petitioner an opportunity of hearing and allowing them to file a reply to the show-cause notice.
Key Issues
1. Whether the order dated 25.03.2023, passed under Section 74 of the GST Act, is liable to be quashed for non-compliance with the mandatory requirement of granting an opportunity of hearing as stipulated in Section 75(4) of the GST Act and the principles of natural justice. Petitioner's arguments: The petitioner contended that the original order under Section 74 was passed without providing an opportunity of hearing, despite a request for adjournment and personal hearing. The show-cause notice itself did not clearly indicate the date, time, and venue for personal hearing, marking them as 'NA'. This violation of Section 75(4) and natural justice principles renders the order invalid. Respondent's arguments: The learned Standing Counsel, based on instructions, stated that no personal hearing was granted, which was evident from the impugned order. The judgment does not record any further arguments from the respondent regarding the validity of the order or the appeal dismissal.
Sections Cited
Section 74, Section 75(4), Section 107
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC-LKO:2863 Court No. - 7 Case :- WRIT TAX No. - 376 of 2024 Petitioner :- M/S Integra Micro Systems Private Limited Lko. Thru. Authorized Signatory Respondent :- State Of U.P. Thru. Prin. Secy. Deptt. of State Tax Lko. And 2 Others Counsel for Petitioner :- Ravindra Gupta Counsel for Respondent :- C.S.C. Hon'ble Pankaj Bhatia,J.
Heard Shri Pranjal Shukla, learned counsel for the petitioner, learned Standing Counsel and perused the records produced by learned Standing Counsel in terms of the order passed by this Court on 20.12.2024. 2. By means of the present petition, the petitioner has challenged the order dated 04.12.2024 whereby the appeal preferred by the petitioner under Section 107 of GST Act was dismissed as being beyond limitation. The petitioner has also challenged the order dated 25.03.2023 passed by respondent no.3 whereby a demand has been created under Section of 74 of GST Act.
Submission of learned counsel for the petitioner is that the petitioner is a bonafide firm doing its business in accordance with law and had by mistake availed ITC but the same was not utilized. As the mistake was bonafide, the petitioner filed corrected return of the financial year 2017-18. It is stated that despite the said, a notice was served under Section 74 of GST Act on 21.06.2022 wherein a proposed liability of Rs.2,11,02,438/- was sought to be levied and collected from the petitioner.
It is stated that after the issuance of show-cause notice, the petitioner moved an application seeking adjournment on the ground that his advocate was unwell and thus, time be granted to file a reply to the show-cause notice. The petitioner also prayed for grant of a personal hearing.
From the record, it appears that two notices were sent to the petitioner thereafter on 03.08.2022 and 02.03.2023 which were named as reminder notices. As the petitioner did not file a reply, an order came to be passed on 25.03.2023 without providing an opportunity of hearing in terms of the mandate of Section 75(4) of the GST Act. The petitioner preferred an appeal against the said order, which was dismissed on the ground of being beyond the prescribed period of limitation.
Contention of learned counsel for the petitioner is that the petitioner has challenged both the orders i.e. the order passed under Section 74 of GST Act as well as the order-in-appeal, however, he lays emphasis in challenging the original order whereby the demand under Section 74 of GST was confirmed, however, without providing for an opportunity of hearing.
From the records as produced by learned Standing Counsel, in the notice issued under Section 74 of GST Act, the date by which the reply was to be submitted was mentioned as 18.03.2023, however, date of personal hearing, time of personal hearing and venue of personal hearing were not indicated and simply the word "NA" was transcribed. Even in the reminder notice sent to the petitioner, in the coloumn of date of personal hearing, time of personal hearing and venue of personal hearing, "NA" was transcribed.
Learned Standing Counsel, based upon instructions, states that no personal hearing was granted, which is also evident from the order impugned.
Section 75(4) of the GST Act mandates the granting of an opportunity of hearing where an adverse decision is contemplated against a person. This provision was also interpreted by this Court in the case of Party Time Hospitality Prop. Smt. Punita Gupta Lko. v. State Of U.P. & 2 Others (Writ Tax No.176 of 2023) decided on 28.08.2023 and the Court was of the view that compliance of Section 75(4) of GST Act is mandatory; while doing so, this Court had also considered the earlier judgments of this Court.
Considering the fact that the original order is contrary to the mandate of Section 75(4) of GST Act and is also violative of principles of natural justice, the order dated 25.03.2023 is liable to be quashed and is accordingly quashed.
As the impugned order has been quashed, order dated 04.12.2024 is also quashed.
Matter is remanded to respondent no.3 to pass fresh orders after giving an opportunity of hearing and after permitting the petitioner to file a reply to the show-cause notice, in accordance with law.
The petition is allowed in above terms. Order Date :- 16.1.2025/VNP/- VISHVANATH PRASAD SHUKLA 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.