In a recent decision, the Allahabad High Court ruled that the failure to file reply to show cause notice ( SCN ) will not take away right of personal hearing under Section 75(4) of the Uttar Pradesh Goods and Service Tax Act, 2017 ( UPGST Act ).
The first notice issued to the petitioner under Section 73 of the Act dated 29.09.2023 did intend to call for a reply from the petitioner but did not propose to grant personal hearing as the abbreviation “NA” was specified against the column “date of personal hearing”. Similar narration appears in the further notice issued to the petitioner. In that against the columns to specify the date of personal hearing, time of personal hearing and venue for personal hearing, the abbreviation “NA” i.e. Not Applicable were recorded.
Thus, upon service of notice the petitioner had been called to file its reply only. Non compliance of that show cause notice may have only led to closure of opportunity to submit written reply. However by virtue of the express provision of Section 75 of the UPGST Act, even in that situation the petitioner did not lose its right to participate in the oral hearing and establish at that stage itself that the adverse conclusions proposed to be drawn against the petitioner, may be dropped.
The rules of natural justice as are ingrained in the statute prescribe dual requirement. First with respect to submission of written reply and the second with respect to oral hearing. Failure to avail one opportunity may not lead to denial of the other. The two tests have to be satisfied independently.
A Division Bench of Justices Manjive Shukla and S.D. Singh observed that “In that regard, it has also been stated that the petitioner’s business operations are lying closed since 2020. Therefore, for reasons of disruption of business operation, petitioner committed a mistake in not responding the notice, within time. In view of the above noted facts and reasons, we find no useful purpose may be served in keeping this petition pending or calling counter affidavit at this stage or to relegate the present petitioner to the forum of alternative remedy. The order impugned has been passed contrary to the mandatory procedure. The deficiency of procedure is self apparent and critical to the out come of the proceedings.”
“Accordingly the impugned order dated 17.12.2023 is set aside, matter is remitted to the respondent No. 2 to pass a fresh order. In that regard the petitioner may file its final reply to the show cause notice within two weeks from today. Thereafter, the petitioner may appear before the assessing authority on 11.03.2024, whereafter the assessing authority may pass appropriate reasoned order” the Bench noted.
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