the essay of 29 May 2024 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="left"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MAY 29, 2024</strong></font></p> <p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Thou Shalt Hear</strong></font></p> <p align="center"><u><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Vijay Kumar</font></strong></u></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION </STRONG>75(4) of the GST Act reads as: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"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." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, if any adverse decision is contemplated, personal hearing is mandatory and the adjudicating authority has no choice. Yet, we come across several cases where the taxpayers must approach High Courts with the grievance that personal hearing was not granted, and adverse decisions are passed like this one. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Challenge is against the order dated 19.08.2021 passed by the Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar, under Section 74(9) of the Central Goods and Services Tax <strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/cgst_act/2017/cgst_act_index.htm" target="_blank">Act, 2017</a></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the High Court, the Additional Chief Standing Counsel raised a preliminary objection as to the availability of remedy of appeal under Section 107 of the Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed that it is <em>basic to procedural law under taxing statutes that opportunity of personal hearing must be provided to an assessee before any assessment/adjudication order is passed against him. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court found it strange and wholly unacceptable that the revenue authorities are failing to observe that mandatory requirement of procedural law by denial of opportunity of hearing to the assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It transpires from the record, that the adjudicating authority neither issued any notice to the petitioner to show cause or to participate in the oral hearing, nor he granted any opportunity of personal hearing to the petitioner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On a query made by the High Court, the Standing Counsel fairly submitted that in light of similar occurrences, noticed in other litigation, he had apprised the Commissioner, Commercial Tax. In turn, the Commissioner, Commercial Tax, Uttar Pradesh, has issued Office Memo No. 1406. The same has been addressed to all Additional Commissioners to be communicated to all field formations for necessary compliance. It reads as: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. The column in which date of personal hearing has to be mentioned, only N.A. is mentioned without mentioning any date. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The column in which time of personal hearing has to be mentioned, only N.A. is mentioned without mentioning time of hearing. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In some cases, the date of personal hearing is prior to which reply to the Show Cause Notice has to be submitted; this is non-est and this practice has to be discontinued. The date of reply to the Show Cause Notice has to be definitely prior to the date of personal hearing. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In some cases, the date of personal hearing is on the same date to which reply to the Show Cause Notice has to be submitted-this is non-est and this practice has to be discontinued. The date of reply to the Show Cause Notice has to be definitely prior to the date of personal hearing. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In all cases observed, the date of passing order either u/s 73(9)/74(9) etc. of the Act is not commensurate to the date of personal hearing. It is trite law that the date of the order has to be passed on the date of personal hearing. For eg.,the date of furnishing reply to SCN is 15.11.2023 and date of personal hearing is 17.11.2023, then the date of order has to be 17.11.2023" </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously the Commissioner's writ does not run in his own department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And held: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, the impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against the illegal order passed without a hearing, the Revenue's plea was that the petitioner could have appealed to the Departmental Appellate Authority. The High Court noted that the bar of alternative remedy cannot be applied in such facts and observed that the appellate authority does not have the authority to remand the proceedings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court disposed of the writ petition with the following observations/directions : </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) The impugned order dated 19.08.2021 passed by the respondent no. 2-Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar, is hereby set-aside. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The matter is remitted to the respondent no.2-Deputy Commissioner, Commercial Tax Department, Sikandrabad, Bulandshahar to pass a fresh order, in accordance with law, after affording due opportunity of hearing to the petitioner. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While, the Court proposed to impose heavy costs for the conduct by the respondent no. 2, it has been assured by the Additional Chief Standing Counsel that such occurrences will not be repeated in future. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the Court directed the Commissioner, Commercial Tax, Uttar Pradesh to undertake remedial measures including providing for disciplinary proceedings against erring officials, where fundamental principles of natural justice may be violated by the adjudicating authorities, without justifiable reason. We reported this case as <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTgxNjIz" target="_blank">2024-TIOL-864-HC-ALL-GST</a></strong>. This happened in Uttar Pradesh with the State GST Authorities. There is a general opinion among intellectual tax experts that State GST officers are not very fussy with the Law, because they don't read the law and so don't burden themselves with silly concepts like Principles of Natural Justice. But look at this case from Delhi High Court in a Central GST matter. <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTgxMjM5" target="_blank">2024-TIOL-693-HC-DEL-GST</a></strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By order dated 28.12.2023 the Show Cause Notice dated 24.10.2018 and 14.02.2020 have been disposed of. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the petitioner: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. No effective date providing an opportunity of personal hearing was granted. No notice of hearing was received for personal hearing on 03.11.2020 and he received a notice for hearing on 04.01.2021. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. On 04.01.2021, Petitioner along with his representative had appeared and made detailed submissions before the Proper Officer and thereafter sought time to file written submissions, which were subsequently filed. However, no order was received and Petitioner got to know that the Officer concerned had changed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. There after, no notice of hearing was received. A notice was received on 07.11.2023 fixing a date for hearing on 07.11.2023 and on 22.11.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Since no notice was received before 07.11.2023, no one could appear on behalf of the Petitioner for the said hearing and for 22.11.2023, a request was made for deferment because the counsel was not available. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. There after, a notice dated 11.12.2023 was received fixing a date of hearing on </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">18.11.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. On 18.12.2023, a communication was sent to the Respondent that the date appeared to be incorrect. In December, they were asked to appear in November. There appears to be some limitations in the taxpayers' ability to comply with taxmen's directions - like going back in time! However, no further communication has been received but the impugned order records that the hearing was held on 18.12.2023 which is contradicted by the letter dated 11.12.2023. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The counter affidavit filed by the Department confirms the submissions of the petitioner with regard to the notices having been sent for the various dates. The counter affidavit further states that a notice of personal hearing was issued on 11.12.2023 for a hearing on 18.12.2023, but on account of a clerical mistake a date 18.11.2023 was printed on the notice of hearing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On a query raised to the Revenue counsel as to whether there is any office noting on the file of the case fixing the date of 18.12.2023, counsel submits that no such office noting has been brought to his notice by the department or provided to him. He submits that the copy of notice dated 11.12.2023 annexed as <em>"Annexure F"</em> is the only notice evidencing the fixing of the date of hearing as 18.12.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court noted: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Perusal of notice dated 11.12.2023 shows that the date of hearing mentioned is 18.11.2023. Said notice dated 11.12.2023 does not fix the hearing on 18.12.2023 and the same is conceded by the respondents who state that on account of a typographical error the date mentioned is 18.11.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The impugned order dated 28.12.2023 records that a hearing was fixed on 18.12.2023 and since petitioner failed to appear, the case was decided ex-parte. Said finding is clearly contradicted from the record produced by the respondents themselves. There is no record of the case hearing being fixed for 18.12.2023 and no hearing notice sent to the petitioner for the hearing of 18.12.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In the instant case, respondents decided to give petitioner an opportunity of hearing and accordingly, as per the respondents, fixed a date of 18.12.2023 for a personal appearance. Admittedly no notice for the said date was either sent or delivered to the petitioner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Consequently, petitioner was prejudiced, inasmuch as, petitioner could not be present at the time of personal hearing and the case was decided in his absence adversely. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Consequently, the impugned order dated 28.12.2023 cannot be sustained and is liable to be set aside and the show cause notice restored on the file of the Adjudicating Authority. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court set aside the impugned order dated 28.12.2023. The matter is remitted to the proper Officer to re-adjudicate the show cause notice in accordance with law. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was clarified that the Court has neither considered nor commented on the merits of the contention of either party. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why do we make a mockery of law? </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week</font></p> </body> </html>