Bharat Mint And Allied Chemicals vs Commissioner Commercial Tax And 2 ... on 4 March, 2022

Here's a summary of the judgment:

1. Outcome
   The Allahabad High Court quashed the impugned adjudication order dated 09.11.2021, which created a demand for tax, interest, and penalty under Section 74 of the CGST/UPGST Act, 2017. The Court allowed the writ petition with costs of Rs. 10,000/- and granted liberty to the respondents to pass a fresh order in accordance with law, after affording a proper opportunity of personal hearing to the petitioner. The Registrar General was directed to send a copy of the order to the Commissioner, Commercial Tax U.P., to ensure adherence to Section 75(4) by Proper Officers/Assessing Authorities.

2. Core Issue
   The core issues before the Court were:

   • Whether an opportunity of personal hearing is mandatory under Section 75(4) of the CGST/UPGST Act, 2017.
   • Whether the impugned adjudication order, passed without affording a personal hearing, violated principles of natural justice, thereby warranting its quashing under Article 226 of the Constitution of India despite the availability of an alternative remedy.

3. Key Facts

   • The petitioner, Bharat Mint And Allied Chemicals, challenged an adjudication order dated 09.11.2021, which raised a demand for tax, interest, and penalty.
   • The petitioner contended that the order was issued without providing an oral hearing, thereby violating the principles of natural justice and Section 75(4) of the CGST/UPGST Act, 2017.
   • The show cause notice dated 09.09.2021 mentioned a possibility of personal hearing but left the date, time, and venue blank.
   • The respondents admitted in their counter-affidavit that no opportunity for a personal hearing was provided, only allowing the petitioner to reply to the show cause notice.
   • The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy of appeal under Section 107 of the Act.

4. Arguments (Taxpayer vs Revenue)

   • Taxpayer (Petitioner):
     • The impugned order was passed in gross violation of the principles of natural justice, specifically Section 75(4) of the CGST/UPGST Act, 2017, as no oral hearing was afforded, and adverse material was not confronted.
     • The order is unsustainable and should be quashed.
   • Revenue (Respondents):
     • The writ petition is not maintainable due to the alternative remedy of appeal available under Section 107 of the Act.
     • No opportunity of hearing is required before passing the assessment order, citing Union of India and Others Vs. M/s.Jesus Sales Corporation.
     • Admitted that only a written reply to the show cause notice was permitted, not a personal hearing.

5. Court’s Reasoning

   • Mandatory Personal Hearing: The Court interpreted Section 75(4) of the CGST/UPGST Act, 2017, unequivocally stating that an opportunity of personal hearing shall be granted either upon a written request from the taxpayer or where an adverse decision is contemplated against them. Since the impugned order was an adverse decision, a personal hearing was mandatory regardless of a request.
   • Violation of Natural Justice: The Court found a patent breach of natural justice and the legislative mandate of Section 75(4) because the show cause notice failed to specify hearing details, and the respondents admitted to not providing a personal hearing.
   • Maintainability of Writ Petition: The Court rejected the alternative remedy argument, reiterating established Supreme Court precedents that a writ petition under Article 226 is maintainable when an order is passed in total violation of principles of natural justice, which was the admitted position in this case.
   • Misinterpretation of Precedent: The Court criticized the revenue's reliance on M/s.Jesus Sales Corporation, noting that it pertained to a different statutory provision (Section 4M(1) of the Imports and Exports (Control) Act, 1947) that did not mandate personal hearing, unlike Section 75(4) of the GST Act. The Court found the counter-affidavit to be filed in a casual manner without proper understanding of the law.

6. Statutory References

   • Central Goods and Services Tax Act, 2017: Section 74(2), Section 75(4), Section 107.
   • U.P. Goods and Services Tax Act, 2017: Section 75(4), Section 107.
   • Constitution of India: Article 226.
   • Imports and Exports (Control) Act, 1947: Section 4M(1) (3rd proviso).

7. Precedents Cited

   • Union of India and Others Vs. M/s.Jesus Sales Corporation AIR 1996 SC 1509
   • Himmatlal Harilal Mehta v. State of Madhya Pradesh, AIR 1954 SC 403
   • Collector of Customs v. Ramchand Sobhraj Wadhwani, AIR 1961 SC 1506
   • Collector Of Customs & Excise, Cochin & Ors. vs A. S. Bava, AIR 1968 SC 13
   • Dr. Smt. Kuntesh Gupta vs Management Of Hindu Kanya Mahavidyalaya
   • L.K. Verma v. HMT Ltd. and anr., (2006) 2 SCC 269
   • M.P. State Agro Industries Development Corpn. Ltd. & Anr. vs. Jahan Khan (2007) 10 SCC 88
   • Dhampur Sugar Mills Ltd. v. State of U.P. and others (2007) 8 SCC 338
   • BCPP Mazdoor Sangh Vs. NTPC (2007) 14 SCC 234
   • Rajasthan State Electricity Board v. Union of India, (2008) 5 SCC 632
   • Mumtaz Post Graduate Degree College Vs. University of Lucknow,(2009) 2 SCC 630
   • Godrej Sara Lee Limited v. Assistant Commissioner (AA), (2009) 14 SCC 338
   • Union of India v. Mangal Textile Mills (I) (P) Ltd., (2010) 14 SCC 553
   • Union of India v. Tantia Construction (P) Ltd., (2011) 5 SCC 697
   • Southern Electricity Supply Co. of Orissa Ltd. v. Sri Seetaram Rice Mill, (2012) 2 SCC 108
   • State of M.P. Vs. Sanjay Nagaich (2013) 7 SCC 25
   • State of H.P. vs. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499
   • Star Paper Mills Ltd. Vs. State of U.P. and others, JT (2006) 12 SC 92
   • State of Tripura vs. Manoranjan Chakraborty, (2001) 10 SCC 740
   • Paradip Port Trust vs Sales Tax Officer and Ors. (1998) 4 SCC 90
   • Feldohf Auto & Gas Industries Ltd. Vs. Union of India (1998) 9 SCC 710
   • Isha Beebi Vs. Tax Recovery Officer (1976) 1 SCC 70
   • Whirlpool Corporation Vs. Registrar of Trademarks (1998) 8 SCC 1
   • Guruvayur Devasworn Managing Committee Vs C.K. Rajan (2003) 7 SCC 546
   • Oryx Fisheries Pvt. Ltd. Vs. Union of India & Others (2010)13 SCC 427
   • Mangilal Vs. State of M.P. (1994) 4 SCC 564
   • Siemens Ltd. VS. State of Maharashtra (2006) 12 SCC 33
   • Kaikhosrou (Chick) Kavasji Framji of Indian Inhabitant Vs. Union of India (2019) 20 SCC 705
   • M/s Shree Bhawani Paper Mills Ltd. Vs. State Of U.P. and Another (Writ Tax No. 255 of 2012, decided on 10.09.2015)
   • M/s. Rapti Commissions Agency Vs. Union of India (2010) 1 AllLJ 710 : (2009) 244 ELT 8
   • Oudh Sugar Mill Vs. State of U.P. (2015) 3 AllLJ 774