Party Time Hospitality Prop. Smt. Punita Gupta Lko. vs. State Of U.P. Thru Prin. Secy. Tax And Registration Lko And 2 Others

Held

The Court held that the order confirming the demand under Section 74 of the GST Act was passed without affording the petitioner an opportunity of hearing, which is contrary to the mandate of Section 75(4) of the GST Act. The Court noted that as an expropriatory action, the principles of natural justice had to be complied with. Consequently, both the impugned orders dated 16.11.2021 and 04.08.2023 were set aside. The matter was remanded to the respondents to pass fresh orders in accordance with the law, after providing the petitioner with an opportunity of hearing. The Court relied on its previous judgments in M/s Mohini Traders, M/s Lari Almirah House, and Bharat Mint & Allied Chemicals. The issue of limitation for the appeal was implicitly addressed by setting aside the appellate order and remanding the matter for fresh consideration.

Facts

The petitioner, Party Time Hospitality Prop. Smt. Punita Gupta Lko., challenges an order dated 16.11.2021 confirming a demand under Section 74 of the GST Act and an order dated 04.08.2023 dismissing their appeal. The petitioner claims to have taken over a party lawn on lease from 01.08.2018 and had no involvement prior to that date. A show-cause notice was issued on 28.09.2021, indicating a demand but lacking details on the invocation of Section 74 and personal hearing particulars. The petitioner did not file a reply, leading to an order confirming tax and penalty for July 2017 to March 2018. The appeal was dismissed for being filed beyond the limitation period under Section 107 of the GST Act.

Key Issues

1. Whether the order confirming the demand under Section 74 of the GST Act is vitiated due to the non-compliance with the principles of natural justice, specifically the mandate of Section 75(4) of the GST Act regarding affording an opportunity of hearing, even if no reply was filed by the petitioner? 2. Whether the dismissal of the petitioner's appeal by the appellate authority on the ground of limitation under Section 107 of the GST Act is sustainable, considering the circumstances leading to the original order? Petitioner's Arguments: The petitioner contends that the show-cause notice was deficient in details regarding the invocation of Section 74 and the personal hearing. They argue that an opportunity of hearing must be granted irrespective of whether a reply is filed, citing judgments in M/s Mohini Traders v. State of U.P. & Anr., M/s Lari Almirah House v. State of U.P. & Ors., and Bharat Mint & Allied Chemicals v. Commissioner of Commercial Tax. The petitioner emphasizes that the principles of natural justice were violated. Respondent's Arguments: The respondent argues that the petitioner failed to file any reply to the show-cause notice and that the appeal was correctly dismissed as it was filed beyond the prescribed period of limitation.