GST Commissioner Refuses to provide Personal Hearing Despite Written Request: Allahabad HC Imposes 20K Cost [Read Order]

The Allahabad High Court imposed penalties to the Joint Commissioner SGST, Corporate Circle-1, Ghaziabad Rs. 20,000 for issuing a show-cause notice without stating the date and time of the personal hearing and for issuing an order under Section 74 of the Goods and Services Tax Act, 2017 that made a demand of over Rs. 5 crore without taking into account the assesee's specific request for a personal hearing.

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Due to its incorrect classification of products, Merino Industries Ltd., the petitioner, received a show-cause notice under Section 74. 'NA' was written in the column for the date and time of the personal hearing in the show cause notice. In response, the petitioner asked for a personal hearing and refuted all of the claims. Nevertheless, the order was issued without a hearing opportunity.

The petitioner's counsel contested the order under Section 74 of the Act, arguing that Section 75(4) required the authority to provide the petitioner with a personal hearing opportunity, particularly because the request had been submitted in writing.

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It was argued that the order was in violation of the Circular dated 13.06.2024 issued by the Additional Commissioner Law, Commercial Tax, U.P. which was issued pursuant to the directions of the High Court in Laskin Engineering Pvt. Ltd. Vs. State of U.P. and Another regarding opportunity of personal hearing.

The Court noted that the Department's Standing Counsel had provided departmental instructions without providing a rationale for noncompliance with the Act's obligatory provisions.

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According to the Court's ruling in Laskin Engineering Pvt. Ltd. vs. State of U.P. and Others, the petitioner was refused a personal hearing in violation of Section 75(4) of the Act. Holding that the Authority was not adhering to the mandatory provision, the Court noted Office Memo No. 1406 dated 12.11.2024 issued by the Commissioner, Commercial Tax, Uttar Pradesh, which stipulates that the date of the show cause notice and the date of the reply must be before the date of the personal hearing; an order must be issued on the date of the personal hearing; and the date of the personal hearing must be mentioned in the column for the date and time of the personal hearing rather than NA.

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The GST Act's Section 75(4) stipulates that the assessee must be granted a personal hearing upon written request in cases where he is subject to a tax or penalty or when an unfavorable action is being considered against him.

According to the division bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra, the court has heard countless cases in which show cause notices and ex-parte assessments were made following the firm's cancellation of its GST registration. These cases were based on notices being uploaded to the portal without personal service.

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The Court ruled that the authorities had violated natural justice principles by refusing the petitioner's written request for a personal hearing. As a result, the Joint Commissioner SGST, Corporate Circle-1, Ghaziabad, who had sent the show cause notice and the contested order, had the order under Section 74 set aside by the court at a cost of Rs. 20,000 paybale.

Furthermore, the Court ordered that police receive the necessary training because they are not adhering to the directives and circulars that have been sent to them. It mandated that the negligent authorities face disciplinary action as outlined in Laskin Engineering Pvt. Ltd.; otherwise, the State would suffer.

To Read the full text of the Order CLICK HERE

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