M/S Mahendra Skills Training And Development PVT. LTD. Lko. Thru. Director Naveen Kumar Jain vs. State Of U.P. Thru. Prin. Secy. (Institutional Finance) U.P. Govt. Lko. And Another
Original PDF →Facts
The petitioner, M/s Mahendra Skills Training And Development Pvt. Ltd., challenged an order dated 26.07.2023 passed by the Deputy Commissioner, State Tax, Sector-20, Lucknow. This order raised a demand exceeding Rs. 39,23,476/- for the tax period 2017-18. The petitioner's primary contention was that they were denied an opportunity of oral hearing. The notice issued on 07.02.2023 indicated "NA" against the columns for "Date of personal hearing," "Time of personal hearing," and "Venue where personal hearing will be held," effectively precluding any oral hearing. The petitioner argued this violated principles of natural justice and statutory provisions.
Held
The Court held that Section 75(4) of the U.P. GST Act, 2017, mandates an opportunity of hearing where an adverse decision is contemplated against a person, and the assessee is not required to explicitly request such a hearing. The Court agreed with the principle laid down in Bharat Mint & Allied Chemicals, stating that the Assessing Authority is bound to afford a personal hearing before passing an adverse order. The fact that the petitioner might have marked 'No' or that the notice indicated 'NA' for personal hearing has no legal consequence when an adverse order is contemplated. The Court emphasized that in the context of an assessment order creating a significant civil liability, a minimal opportunity of hearing is mandatory to observe the principles of natural justice. Such an opportunity allows the authority to pass a reasoned order and facilitates better appreciation at the appellate stage. Consequently, the impugned order dated 26.07.2023 was set aside, and the matter was remitted to the Deputy Commissioner for issuing a fresh notice and affording a hearing to the petitioner.
Key Issues
1. Whether the Assessing Authority was bound to afford an opportunity of personal hearing to the petitioner before passing an adverse assessment order, as contemplated under Section 75(4) of the U.P. GST Act, 2017, despite the petitioner not explicitly requesting it or marking their choice to avail it in the notice? Petitioner's Arguments: The petitioner argued that Section 75(4) of the U.P. GST Act mandates an opportunity of hearing when an adverse decision is contemplated, irrespective of whether the assessee requests it. They relied on the interpretation of this provision by a coordinate bench of the High Court in Bharat Mint & Allied Chemicals Vs. Commissioner Commerical Tax & 2 Ors. and a Gujarat High Court decision in M/S Hitech Sweet Water Technologies Pvt. Ltd. Vs. State of Gujarat. The petitioner asserted that the "NA" endorsement in the notice effectively denied them a hearing, making the adverse assessment order contrary to law. Respondent's Arguments: The judgment does not record any specific arguments made by the respondent State.
Sections Cited
Section 75(4)
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2024:AHC-LKO:19872-DB Court No. - 2 Case :- WRIT TAX No. - 45 of 2024 Petitioner :- M/S Mahendra Skills Training And Development Pvt. Ltd. Lko. Thru. Director Naveen Kumar Jain Respondent :- State Of U.P. Thru. Prin. Secy. (Institutional Finance) U.P. Govt. Lko. And Another Counsel for Petitioner :- Anurag Mishra Counsel for Respondent :- C.S.C. Hon'ble Vivek Chaudhary,J. Hon'ble Om Prakash Shukla,J.
Heard Sri Pranjal Shukla, learned counsel for the petitioner and learned Standing Counsel for State respondents.
Challenge has been raised to the order dated 26.07.2023 passed by the Deputy Commissioner, State Tax, Sector-20, Lucknow for the tax period 2017-18, whereby demand in excess to Rs.39,23,476/- has been raised against the present petitioner.
Solitary ground being pressed in the present petition is, the only notice in the proceedings was issued to the petitioner on 07.02.2023 seeking his reply within 30 days. Referring to item no. 3 of the table appended to that notice, it has been pointed out, the Assessing Authority had at that stage itself chosen to not give any opportunity of hearing to the petitioner by mentioning "NA" against column description "Date of personal hearing". Similar endorsements were made against the columns for "Time of personal hearing" and "Venue where personal hearing will be held". Thus, it is the objection of learned counsel for the petitioner, the petitioner was completely denied opportunity of oral hearing before the Assessing Authority.
Relying on Section 75(4) of the U.P. GST Act, 2017 (hereinafter referred to as the 'Act') as interpreted by a coordinate bench of this Court in Bharat Mint & Allied Chemicals Vs. Commissioner Commerical Tax & 2 Ors., (2022) 48 VLJ 325, it has been then asserted, the Assessing Authority was bound to afford
opportunity of personal hearing to the petitioner before he may have passed an adverse assessment order. Insofar as the assessment order has raised disputed demand of tax about Rs.19 lacs, the same is wholly adverse to the petitioner. In absence of opportunity of hearing afforded, the same is contrary to the law declared by this Court in Bharat Mint & Allied Chemicals (supra). Reliance has also been placed on a decision of the Gujarat High Court in M/S Hitech Sweet Section 75(4) of the Act reads as under : "An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person."
We find ourselves in complete agreement with the view taken by the coordinate bench in Bharat Mint & Allied Chemicals (supra). Once it has been laid down by way of a principle of law that a person/assessee is not required to request for "opportunity of personal hearing" and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence.
Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, we note, the impugned order itself has been passed on 26.07.2023. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created.
Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required.
Accordingly, the present writ petition is allowed. The impugned order dated 26.07.2023 is set aside. The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-20, Lucknow to issue a fresh notice to the petitioner within a period of two weeks from today. The petitioner undertakes to appear before that authority on the next date fixed such that proceedings may be concluded, as expeditiously as possible. Order Date :- 5.3.2024 Arti/- [Om Prakash Shukla,J.] [Vivek Chaudhary,J.] ARTI MAURYA 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.