Opportunity of Hearing is Mandatory u/s 75(4) of UPGST Act before Imposing Tax or Penalty: Allahabad HC [Read Order]

In a recent decision, the Allahabad High Court observed that the opportunity of hearing is mandatory under Section 75(4) of the the Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act) before imposing the tax or penalty. The show cause notices were given asking the petitioners to show cause as to why tax and penalty be not imposed upon them. The date fixed in the show cause notice issued to the petitioners was 22.9.2023, 22.9.2023, 13.10.2023 and 13.10.2023 respectively in all four writ petitions.

The petitioners had submitted their reply on 21.9.2023, 21.9.2023, 07.10.2023 and 07.10.2023 respectively. However, it appears that by mistake they marked as “NO” for opportunity of hearing. The counsel for petitioners submitted that the same got marked due to some technical glitch/mistake on the portal. The counsel for petitioners further submitted that Section 75(4) of the U.P. GST Act, 2017 mandatorily requires an opportunity of hearing to be given to the petitioners. He further submits that the orders are passed a day prior to the date fixed for hearing. Thus, the counsel for petitioners stated that petitioners have not been given any opportunity of hearing and in fact, the authority did not even wait till the date, for which notice was given to the petitioners.

Learned counsel for petitioners further relies upon a judgment dated 3.5.2023 passed by a Division Bench of the Court in Writ Tax No.551 of 2023 M/s. Mohini Traders vs. State of U.P. and another. Section 75(4) of the U.P. GST Act, 2017 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.”

A Division Bench comprising Justices Om Prakash Shukla and Vivek Chaudhary observed that “Since in the present cases, both tax and penalty are imposed against the petitioners and admittedly, an adverse decision is contemplated against the petitioners, therefore, under Section 75(4) of the Act of 2017, an opportunity of hearing was mandatorily required to be given by the department to the petitioners and merely marking the same as “NO” in the option cannot entitle the department to pass an order without giving any opportunity or even without waiting for the petitioners to appear on the date fixed.”

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