UP GST Adjudication Without Personal Hearing Set Aside: Allahabad HC Grants 15 Days to Buddha Resorts to File Reply [Read Order]

The Lucknow Bench of Allahabad High Court held that an adjudication order passed under the U.P. Goods and Services Tax Act, 2017 (U.P. GST), without granting a meaningful opportunity of personal hearing, is vitiated for violation of the principles of natural justice and cannot be sustained in law.

The writ petition was filed by M/s Buddha Resorts Pvt. Ltd., challenging an adjudication order dated 30.03.2024 passed under Section 73(9) of the U.P. Goods and Services Tax Act, 2017, for the tax period 2018-19. The case arose when proceedings were initiated against the petitioner alleging tax liability for the relevant period, culminating in the impugned adjudication order.

The principal cause behind the challenge was that the petitioner was not afforded a reasonable opportunity of personal hearing before the demand was finalized. The date fixed for filing the reply was treated as the date of personal hearing, and even in a subsequent reminder dated 4.03.2024, the column relating to the date and time of personal hearing mentioned “NA.”

Despite these procedural lapses, the adjudicating authority proceeded to pass the order creating tax demand, prompting the petitioner to approach the High Court directly instead of availing the statutory appellate remedy.

On behalf of the petitioner, Mudit Agarwal contended that the adjudication order was passed in gross violation of the principles of natural justice. It was argued that no effective opportunity of personal hearing was granted, even though such hearing is a mandatory requirement before passing an order under Section 73(9) of the U.P. Goods and Services Tax Act, 2017.

The petitioner relied upon an earlier decision of the High Court in Mahaveer Trading Company vs Deputy Commissioner State Tax, where a similar adjudication order was set aside on the ground that absence of a personal hearing renders the proceedings procedurally defective.

The Bench comprising Justice Shekhar B. Saraf and Justice Manjive Shukla held that the undisputed facts clearly established a violation of the principles of natural justice. The Court observed that unless a taxpayer is put to notice of the proposed demand and is granted an adequate opportunity to present its case through a personal hearing, any adjudication order passed would remain procedurally defective.

The High Court noted that no useful purpose would be served by relegating the petitioner to the appellate forum when the foundational requirement of natural justice had not been met. Accordingly, the Court set aside the adjudication order dated 30.03.2024.

The Bench directed that the impugned order be treated as a final notice and granted the petitioner 15 days’ time to submit a further reply, permitting it to raise all jurisdictional and merit-based issues. It was further directed that the adjudicating authority shall fix a date for personal hearing with at least 15 days’ prior notice and thereafter pass a reasoned order in accordance with law.

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