M/S Viswkarma Furniture vs. Additional Commissioner Grade 2 And Another

Held

The Court held that the order dated 14.03.2022 was passed in clear violation of Section 75(4) of the U.P. G.S.T. Act and the principles of natural justice. The reasoning was that the show cause notice did not indicate any date, time, or venue for a personal hearing, and despite the petitioner's reply requesting a hearing, none was provided. The Court found the respondent's submission that the petitioner never demanded a hearing unconvincing in light of the statutory requirement. The ratio decidendi is that an order passed without affording a mandatory personal hearing, as stipulated by law, is unsustainable. Consequently, the writ petition was allowed, the order dated 14.03.2022 was quashed, and the matter was remanded to the respondent no.2 to issue a fresh notice and proceed strictly in accordance with law, if advised.

Facts

The petitioner, M/s Viswkarma Furniture, challenges two orders: one dated 14.03.2022 quantifying a GST demand under Section 74 of the U.P. G.S.T. Act, and another dated 14.11.2022 dismissing their appeal as time-barred. The demand stemmed from a SIB survey report dated 13.03.2019, which found unaccounted goods. A show cause notice dated 07.10.2021 was issued, followed by a reminder dated 27.12.2021. The petitioner claims no personal hearing was scheduled or granted, despite their reply denying allegations and requesting a hearing. The order dated 14.03.2022 was passed without a hearing, and the subsequent appeal was dismissed due to delay.

Key Issues

1. Whether the order dated 14.03.2022, passed under Section 74 of the U.P. G.S.T. Act, is liable to be quashed for violation of the principles of natural justice and Section 75(4) of the Act, as no opportunity of personal hearing was granted to the petitioner. Petitioner's arguments: The petitioner contends that the show cause notice did not specify the date, time, or venue for a personal hearing. Despite a reply denying allegations and requesting a hearing, the order was passed ex-parte without providing such an opportunity. This violates Section 75(4) of the U.P. G.S.T. Act and the principles of natural justice. They rely on judgments in Writ Tax No.1029 of 2021 (Bharat Mint and Allied Chemicals vs. Commissioner of Commercial Tax) and Writ Tax No.58 of 2023 (M/s Mohan Agencies vs. State of U.P.). The petitioner also argues that the order dated 14.03.2022 is not merged with the appellate order as the appeal was dismissed on limitation, not merits. Respondent's arguments: The Standing Counsel, based on instructions, stated that the petitioner never demanded an opportunity of hearing.