Allahabad High Court insists on mandatory personal hearing before adverse GST orders
Background of the dispute
The decision in Manas Traders Devi Vs State of U.P. (Allahabad High Court) revolves around an assessee’s challenge to an adverse order issued under the U.P. GST Act, 2017. The core grievance was straightforward: the adjudicating authority finalised the proceedings and passed an adverse order without affording the assessee a personal/oral hearing.
The writ petition questioned the legality of the order dated February 21, 2023, primarily on the ground that the statutory mandate under Section 75(4) of the U.P. GST Act, 2017 had been violated.
Statutory framework: Requirement of personal hearing
Scope of Section 75(4) of U.P. GST Act
Section 75(4) of the U.P. G.S.T. Act, 2017 categorically requires that:
- Before passing any order adverse to a person (including a registered assessee),
- The authority must grant an opportunity of personal hearing.
The High Court expressly noted that this provision is not discretionary. Once the authority proposes to take an adverse view, an oral/personal hearing becomes compulsory.
Notice under Section 73(1) and its defect
In this case:
- A notice was issued to the assessee under
Section 73(1)of the Act. - The notice did ask the assessee to submit a written reply.
- However, in the columns meant for:
- Date of personal hearing,
- Time of personal hearing, and
- Venue of personal hearing,
the officer had written “NA” (Not Applicable).
This single feature of the notice became crucial evidence. It demonstrated, on the face of the record, that the authority had not intended to provide any opportunity of personal hearing at all.
Court’s appreciation of facts
No opportunity of oral hearing granted
The Allahabad High Court observed that:
- The entries “NA” against all columns relating to personal hearing conclusively showed that the assessee was never offered any date or time for appearance.
- As a result, the assessee was effectively restricted only to filing a written reply, without any chance to make oral submissions.
Therefore, the Court drew the only possible inference: no opportunity of personal hearing had been given.
Written reply vs. oral hearing – two distinct safeguards
The Court examined how procedural safeguards under the Act are structured and made an important distinction:
- Right to submit a written reply to a show-cause notice; and
- Right to a personal/oral hearing before an adverse decision is taken.
Both rights emanate from the principles of natural justice as incorporated in the statute. The Court underlined that these are separate and independent requirements.
Failure to utilise one procedural opportunity (for example, not filing a written reply) does not automatically extinguish the other statutory safeguard (i.e., the right to oral hearing under
Section 75).
In practical terms, even if the assessee defaults in filing a written response, the authority is still bound to: