Omission of Personal Hearing date in the SCN violates the Principle of Natural Justice

The Hon'ble Orissa High Court in the case of Alfa Cityinfra (P.) Ltd. v. Chief Commissioner of CT and GST, Odisha [Writ Petition (Civil) No. 16864 of 2024 dated July 23, 2024], held that any defect in the Show Cause Notice ("SCN") would cause violation of principles of natural justice. Hence, the demand was to be set aside and time was to be extended for Assessee to file reply and thereafter in event personal hearing was sought, it would be given.

Facts:

M/s. Alfa Cityinfra Private Ltd. ("the Petitioner"), challenged a demand notice issued under Section 73 of the Odisha Goods and Services Tax Act, 2017 ("the OGST Act") dated July 27, 2021 ("the Impugned Notice"), issued by the Sales Tax Officer pertaining to Financial Year 2018-19.

The Impugned Notice directed the Petitioner to file a reply as well as for personal hearing on dates and times mentioned. However, the table in the Impugned Notice did not specify a date for the personal hearing. Additionally, the Petitioner cited the pandemic as a reason for not submitting a timely reply to the SCN.

Hence, aggrieved by the Impugned Notice, the Petitioner filed the present writ petition.

Issue:

Whether the omission of a personal hearing date in the SCN violates the principle of natural justice?

Held:

The Hon'ble Orissa High Court in Writ Petition No. 16864 of 2024 held as under:

· Opined that, the Petitioner was relying on directions given in the Impugned Notice. It was in respect of a demand. Any defect in the SCN is violation of principles of natural justice.

· Held that, the Court deemed the Impugned SCN invalid and therefore, quashed it. Furthermore, the Court granted the Petitioner a two-week period to file a response and assured that a personal hearing would be provided. Consequently, the writ petition was allowed.

Our Comments:

Section 75 of the Central Goods and Service Tax Act, 2017 ("the CGST Act") discusses the "General Provisions relating to determination of tax". Further, Section 75(4) of the CGST Act specifically states 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.

In the Pari Materia case of the Hon'ble Allahabad High Court in M/s Mohan Agencies v. State of U.P. and Another [Writ Tax No. 58 of 2023, dated December 13, 2023], wherein the Court held that providing the opportunity of personal hearing would ensure observance of rule of natural justice and allow the Respondent to pass appropriate and reasoned orders in order to serve the interest of justice and allow a better appreciation to arise at the appeal stage. Remitted the matter back to the Revenue Department.

Similar was the issue before the Hon'ble Madras High Court in Haarine Associates v. Assistant Commissioner (ST)(FAC) [Writ Petition No.15691 of 2024 and W.M.P. Nos.17100 to 17102 of 2024 dated June 24, 2024], set aside an assessment order because the order was issued without providing an opportunity to address the discrepancies. Consequently, the court agreed with the Assessee to remit 10% of the disputed tax demand within two weeks and allowed the submission of reply to SCN.

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED