M/S Jai Vindhya Udyog Thru. Its Partner Niraj Kumar Agarwal vs. State Of U.P. Thru. Prin. Secy. (Institutional Finance) Lko. And 2 Others

Held

The Court held that the original order dated 29.08.2022, passed under Section 73(9) of the GST Act, was contrary to the mandate of Section 75(4) of the GST Act and violative of the principles of natural justice. The Court noted that the show-cause notice and its reminder did not indicate the date, time, or venue for personal hearing, instead transcribing "NA" in those columns. This failure to provide an opportunity of hearing, as mandated by Section 75(4), rendered the order unsustainable. The Court relied on its previous decision in Party Time Hospitality Prop. Smt. Punita Gupta Lko. v. State Of U.P. & 2 Others, which affirmed the mandatory nature of Section 75(4). Consequently, the original order dated 29.08.2022 was quashed. As a direct consequence of quashing the original order, the appellate order dated 02.09.2023, 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 permitting them to file a reply to the show-cause notice. The ratio decidendi is that an order passed in violation of Section 75(4) of the GST Act, which mandates an opportunity of hearing when an adverse decision is contemplated, is liable to be quashed.

Facts

The petitioner, M/s Jai Vindhya Udyog, challenged two orders. The first, dated 29.08.2022, was passed by respondent no.3 under Section 73(9) of the GST Act, creating a demand against the petitioner. The second order, dated 02.09.2023, dismissed the petitioner's appeal against the first order as being beyond the prescribed limitation period. The petitioner received a notice on 06.08.2021 regarding discrepancies. A show-cause notice under Section 73 of the GST Act was issued on 28.06.2022, followed by a reminder on 22.08.2022. The petitioner did not file a reply, leading to the ex-parte order. The petitioner argued that the original order was passed without an opportunity of hearing, violating Section 75(4) of the GST Act.

Key Issues

1. Whether the order dated 29.08.2022, passed under Section 73(9) of the GST Act, is liable to be quashed for non-compliance with the principles of natural justice and Section 75(4) of the GST Act, specifically for not providing an opportunity of hearing to the petitioner. Petitioner's arguments: The petitioner contended that the original order confirming the demand under Section 73(9) was passed without providing an adequate opportunity of hearing, violating the mandatory provisions of Section 75(4) of the GST Act. They highlighted that the show-cause notice and reminder indicated "NA" for the date, time, and venue of personal hearing. The petitioner relied on the judgment in 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, which held compliance with Section 75(4) to be mandatory. Respondent's arguments: The learned Standing Counsel, based on instructions, stated that no personal hearing was granted, which was also evident from the impugned order. The judgment records no further arguments from the respondent.