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Case Summary: M/s N A Enterprises vs. State of U.P. and 2 Others

Case No.: WRIT TAX No. 222 of 2024

Date of Order: September 6, 2024

Court: High Court of Judicature at Allahabad, Lucknow Bench (Court No. 3)

Judges: Hon'ble Mrs. Sangeeta Chandra, J. and Hon'ble Brij Raj Singh, J.

Facts of the Case: The petitioner, M/s N A Enterprises, a registered trader under the Uttar Pradesh Goods and Services Tax (GST) Act, received a show cause notice under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017. The notice was issued by the opposite party on February 14, 2024, demanding a response by March 14, 2024, regarding a tax liability. However, before the petitioner could submit a reply, an order was passed on March 15, 2024, determining a tax liability of ₹1.45 crore for both CGST and SGST, along with an equal penalty and interest of ₹98.67 lakh.

The petitioner contended that the order was passed without providing a proper opportunity for a personal hearing, violating Section 75(5) of the CGST Act. The petitioner referred to a prior case, Mahaveer Trading Company vs. Deputy Commissioner, where the court had ruled that personal hearings are mandatory before passing an adverse order.

Submission by the Petitioner: The petitioner argued that:

1.     The impugned order dated March 15, 2024, was passed without a proper hearing as mandated under the CGST Act, violating natural justice principles.

2.     The tax liability and penalties were imposed without due process, as the petitioner did not get adequate time to respond to the show cause notice or appear for a personal hearing.

3.     The petitioner cited a prior ruling (Mahaveer Trading Company vs. Deputy Commissioner) where a similar issue led to the quashing of the order for lack of a personal hearing.

4.     Additionally, the petitioner raised concerns that penalties had already been imposed in a previous order, and the imposition of penalties for the same act was in violation of Section 75(13) of the CGST Act, 2017, which prohibits multiple penalties for the same offense.

Submission by the Respondent: The respondent, represented by the Standing Counsel, argued that:

1.     The petitioner was given a proper opportunity for a hearing, with the date, time, and place of the personal hearing clearly communicated (February 28, 2024). However, the petitioner did not avail of the opportunity nor did they file for an adjournment or submit a reply.

2.     As the petitioner failed to respond or appear for the hearing, the order was rightly passed assuming no objections.

3.     The petitioner has the statutory remedy of appealing the order under Section 107 of the CGST Act before the appellate authority.

Findings and Judgment of the Court:

·        The Court reviewed the facts and concluded that the petitioner's case was different from the Mahaveer Trading Company case. In Mahaveer Trading Company, the court had observed that the petitioner was not given an opportunity for a personal hearing before an adverse order was passed. However, in this case, the petitioner was notified about the personal hearing scheduled for February 28, 2024, but failed to attend or request an adjournment.

·        The Court noted that the petitioner's failure to attend the hearing or submit a reply justified the order passed by the authorities. The petitioner also acknowledged filing an appeal against a similar order, and the Court observed that the penalties could be imposed separately for different months, even if the purchases and invoices were from the same traders.

Conclusion: The writ petition was dismissed as misconceived, with the Court holding that the petitioner had ample opportunity to respond but failed to do so.

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