Court stated that the requirement for submitting a written reply to SCN and the opportunity for an oral hearing are independent of each other
Legality of Restricting Personal Hearing on Failure of Replying SCN: In a recent ruling on 12 February 2024 by the Allahabad High Court in the case of Atlas Cycles Haryana Ltd vs State of UP & Ors (W. T. No -144/2024), it was declared that failure to respond to a show cause notice (SCN) does not preclude the opportunity for a personal hearing, as mandated under Section 75(4) of the Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act).
Under Section 75(4) of the UPGST Act, individuals are entitled to a hearing upon request in writing or when any adverse action is contemplated against them. The court, comprised of Justice Saumitra Dayal Singh and Justice Manjive Shukla, emphasized the importance of adhering to principles of natural justice, stating that the requirement for submitting a written reply and the opportunity for an oral hearing are independent of each other.
In the case where a show cause notice was issued to the Petitioner under Section 73 of the UPGST Act, with “Not Applicable” stated under the column for the “date of personal hearing,” the court noted that the applicant should have been provided with the opportunity for a personal hearing as mandated by Section 75(4) of the Act.
The ruling clarified that while failure to respond to the SCN may result in the closure of the opportunity to submit a written reply, it does not forfeit the right to participate in the oral hearing. Even in such circumstances, Section 75 of the Act preserves the right of the petitioner to partake in the oral hearing and contest any adverse conclusions proposed against them.
The court deemed the order contrary to mandatory practice and consequently set it aside. The applicant was granted the opportunity to provide a response in person to the assessing authority.
This landmark judgement underscores the significance of upholding procedural fairness and ensuring that individuals are afforded adequate opportunities to present their case before any adverse action is taken against them under the GST laws.
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