M/S P.K. Pan Products Hardoi Thru. Its Partner vs. Commissioner Of Commercial/ State Tax Lko. And 2 Others

Held

The Court held that no opportunity of personal hearing, as requested by the petitioner in their reply to the show cause notice, was provided before the impugned order was passed. The Court found that the dates mentioned by the respondents for personal hearings all preceded the issuance of the show cause notice. The Court relied on the interpretation of Section 75(4) of the U.P. GST Act, 2017, as laid down in *Eveready Industries India Ltd. v. State of U.P. and Anr.*, which mandates granting a personal hearing when a request is received in writing or when an adverse decision is contemplated. The Court noted that the petitioner had specifically requested a personal hearing in their reply to the show cause notice, and no date, time, or place for such a hearing was fixed. Consequently, the impugned order dated August 17, 2022, was set aside. The Assessing Officer was directed to fix a date, time, and place for a personal hearing within two weeks of the order's certification and pass an appropriate order within four weeks thereafter.

Facts

The petitioner, M/s P.K. Pan Products Hardoi, engaged in packing Supari and Zarda, underwent a Special Investigation Branch (SIB) survey on March 10, 2021, where nothing incriminating was found. Subsequently, a notice under Section 61 of the GST Act was issued in June 2021, to which the petitioner replied in November 2021, denying manufacturing at the surveyed premises. Despite this, an intimation of tax ascertained under Section 74(5) of the U.P. GST Act was issued on March 3, 2022, based solely on the SIB report. A search under Section 132 of the Income Tax Act followed on March 4, 2022, seizing books of accounts. The petitioner demanded the SIB report, which was not provided. The petitioner also changed its principal place of business and surrendered its Central Excise registration. Despite the change in jurisdiction, the original authority issued a show cause notice under Section 74(1) for June 2021, which the petitioner replied to in July 2022, again requesting the SIB report and a personal hearing. The authority proceeded to pass an adjudication order on August 17, 2022, imposing a tax liability.

Key Issues

1. Whether the impugned order of adjudication dated August 17, 2022, and the consequential demand of tax are liable to be quashed for gross violation of principles of natural justice, specifically for not providing an oral hearing and not confronting the adverse material, as required by Section 75(4) of the U.P. GST Act, 2017? Petitioner's Arguments: The petitioner argued that the adjudication order was passed in gross violation of principles of natural justice, as no oral hearing was provided despite a specific request in their reply to the show cause notice. They contended that adverse material, specifically the SIB report, was not confronted. Reliance was placed on a co-ordinate bench decision in *Bharat Mint & Allied Chemicals v. Commissioner, Commercial Tax & Others* and Circular No. 1688, directing personal hearings. Further reliance was placed on *Eveready Industries India Ltd. v. State of U.P. and Anr.*, which interpreted Section 75(4) to mandate personal hearings upon request. Respondent's Arguments: The State-respondents raised a preliminary objection regarding the maintainability of the writ petition, citing the availability of an appeal under Section 107 of the Act. They claimed that opportunities for personal hearing were provided on multiple occasions (April 13, May 2, June 15, and June 22, 2022) as evidenced by the GST portal. They also stated that the SIB report was not the sole basis for the assessment, and other facts were considered.