UP GST Act| Dissatisfied Assessee Entitled To Personal Hearing In Addition To Being Given Opportunity For Submitting Representation: Allahabad HC
The Allahabad High Court explained whether in addition to being given an opportunity for submitting representation, a dissatisfied assessee is entitled to personal hearing.
The Lucknow Bench was deciding a petition preferred against the order passed under Section 74 of the Uttar Pradesh Goods & Services Tax Act, 2017.
A Division Bench of Justice Sangeeta Chandra and Justice Brij Raj Singh observed, “Section 75 starts with the subheading ‘General Provisions relating to Determination of Tax’. It has been argued that Section 75 of the Act will apply as a general procedure to be adopted in all actions that are proposed to be taken under Section 73 and 74 of the Act. As against the argument raised by the learned Standing Counsel appearing for the State Respondents, that Section 75 deals with the procedure to be followed by the proper officer after remand of the matter to him by the Tribunal or the Court; it has been argued that if such an interpretation is given to Section 75 of the Act, it would render the situation anomalous as many of the sub-Sections of Section 75 would become otiose.”
The Bench said that under sub-Section (11) of 2017 Act, where any person is served with an order issued under sub-Section (9) and he pays the tax along with interest payable thereon under Section 50 and a penalty equivalent to 50% of such tax payable within 30 days of communication of the order, all proceedings in respect of such notice shall be deemed to be concluded.
Advocate Rahul Agarwal represented the petitioner while Additional Chief Standing Counsel Rajesh Tiwari represented the respondents.
Facts of the Case -
The petitioner company, Eveready Industries India Ltd. was registered under the UP GST Act and an audit notice was issued to it by the Joint Commissioner (Tax Audit), Commercial Tax, Lucknow requiring it to produce books of accounts and present its case regarding due discharge of tax liabilities. A survey of the premises of the petitioner was conducted by the Revenue Officials in 2022 and another notice was issued to it on similar grounds. The petitioner claimed to have complied with all the directions issued by the respondents, however, it was not given any information regarding the action taken in furtherance of audit notices by the respondent authorities.
As per Section 65(4) of the Act, if the respondents failed to complete the audit exercise after the lapse of three months from the date of audit, unless the said period has been explicitly extended, it shall be deemed to have concluded upon expiration of the said period. No draft audit report was prepared or issued to the petitioner. The show cause notice did not provide any date, place, and time of hearing despite the same being mandatory procedure. In the Columns specified for date, place and time of hearing, the show cause notice mentioned NA (not applicable) thereby denying the petitioner any opportunity of hearing. The petitioner submitted its reply and specifically prayed that it may be given personal hearing, if the officer is not satisfied with the written explanation given in reply to the show cause notice.
The High Court in the above context of the case noted, “Under sub-Section (5) of Section 74, the person chargeable with tax may before service of notice under sub-Section (1) pay the amount of tax along with interest payable under Section 50 and a penalty equivalent to 50% of such tax on the basis of his own ascertainment or as ascertained by the proper officer and inform him in writing of such payment. Under sub-Section (6), the proper officer on receipt of such information shall not serve any notice under sub-Section (1) in respect of tax payable if he is satisfied with such payment, however, if he is not satisfied, then, under Sub-Section (7), he shall proceed to issue notice as provided for under sub-Section (1) in respect of such amount, which falls short of the amount actually payable. This can be deemed to be a second notice, or a second opportunity given to the assessee in respect of the amount which falls short of the amount, actually payable.”
The Court added that if on service of such notice, the person chargeable with Tax pays the tax along with interest under Section 50 and a penalty equivalent to 25% of such tax, all proceedings in respect of the said notice shall be deemed to be concluded.
“Penalty in sub-Section (8) is equivalent to 25% of such tax as against penalty, which is payable under sub-Section (1), which is equivalent to the tax specified in the notice. … Under sub-Section (9), the proper officer shall after considering the representation if any, made by the person chargeable with tax, determine the amount of tax, interest, and penalty due from such person and issue an order. Under sub-Section (10), the limitation is provided within which the proper Officer shall issue order under sub-Section (9)”, it further noted.
The Court also observed that initially a notice along with a statement of tax payable along with penalty has to be issued by the proper officer within the time limit as prescribed, to which a representation can be made by the assessee in case he is dissatisfied with such computation of tax and penalty and on the other hand, in case the assessee pays the amount as given in the notice along with interest payable thereon and penalty, then the proper officer may issue orders which may conclude the proceedings.
“Sub-Section (4) of Section 75 provides that 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. Sub-Section (5) provides that if sufficient cause is shown by the person chargeable with tax, the proper officer shall grant time to the said person and adjourn the hearing for reasons to be recorded in writing: provided that no such adjournment shall be granted for more than three times to a person during the proceedings. Sub-Section (6), (7), (8), (9), (10) and (11) of Section 75 relate to the Order to be passed in by the proper officer, determining the amount of tax, interest, and penalty, in conformity with the notice issued to the assessee, and also to nature of the adjudication proceedings and the limitation for concluding the same”, it held.
The Court enunciated that Adjournment is granted in cases where hearing is continuing and it cannot be said to relate to giving time extensions for giving written reply to the show cause notice.
“Taking into account the settled principles of interpretation of Statutes, (a) all Sections of a Statue need to be read together, (b) no words, Section in a Statute can be rendered otiose, (c) any ambiguity in a charging Section must be read in favour of the assessee, (d) a casus omissus can be supplied if the Court, having an overall view of the scheme of the Statute is convinced that the legislature did intend a certain manner of conducting predecisional hearing but draftsman failed to add the necessary words to make it plain and beyond doubt; we are of the considered opinion that word “personal” can easily be construed to have been intended to be added but has been left out erroneously. We, therefore, are in respectful agreement with the three Coordinate Bench decisions cited at the Bar by learned counsel for the petitioner”, it concluded.
Accordingly, the High Court allowed the writ petition, set aside the impugned orders, and remitted the matter to the proper officer to provide opportunity of personal hearing to the petitioner company and then to pass a fresh order.
Cause Title- Eveready Industries India Ltd. v. State of U.P. and Another (Neutral Citation: 2024:AHC-LKO:41587-DB)
Appearance:
Petitioner: Advocates Rahul Agarwal and Utkarsh Malviya.
Respondents: ACSC Rajesh Tiwari