Passing order without hearing is violation of principles of natural justice

The Allahabad High Court has ruled that issuing an order without providing an opportunity for a hearing is a breach of natural justice principles. In the case of Chandani Tent Traders, the petitioner's GST registration was cancelled without them receiving any notice, leading to an ex parte decision. The court found this to be a violation, referencing a previous case where a similar ex parte cancellation was quashed because no physical notice was issued and it was not solely the petitioner's obligation to check the GST portal.

The Hon'ble High Court of Allahabad in the case Chandani Tent Traders v. State of U.P. [WRIT TAX NO. 1084/2024 dated July 23, 2024] it was held that passing a order without giving an opportunity of a hearing is a violation of principles of natural justice.

Facts

Chandani Tent Traders ("the Petitioner") had their GST registration cancelled. The petitioner contended that the petitioner never received notice and the registration was cancelled ex parte and that was a violation of the principles of natural justice.

Issue

Whether passing an order without giving an opportunity of hearing a violation of principles of natural justice?

Held

The Hon'ble High Court of Allahabad held in WRIT TAX NO. 1084/2024 as under

• Relied upon Chemsilk Commerce (P.) Ltd vs State of U.P., in the case the petitioner sought revival of GST registration which was cancelled without giving the petitioner the opportunity of hearing. The order in this case was passed by ex parte hearing. It was held that it was not an obligation of the petitioner to upon the GST portal, along with this no physical notice was issued. It was held the principles of natural justice were not followed and hence quashed the order.
• Held that quashed the impugned order based on the above-mentioned judgement.

Our comments:

In R.B. Traders v. Deputy Commercial Tax Office, The Madras High Court ruled that it is against natural justice principles to issue an order without giving the parties involved a chance to hear it in person. As a result, the ruling was quashed and instructed to give the petitioner a chance to prove their case. The petitioner filed this writ petition to challenge the first respondent's order dated April 1, 2024, and to demand the second and third respondents to defreeze the petitioner's bank account. According to the petitioner, all notifications and correspondence were posted to the GST portal and the petitioner was not aware of the alerts posted on the GST portal since it was a small business concern. It was ruled that the respondent violated the natural justice principles by issuing the orders without giving the petitioner a chance for a face-to-face hearing. The petitioner claims that they have already paid the relevant body around 90% of the tax. Therefore, this Court believes that giving the Petitioner a chance to prove their case on the merits and in compliance with the law is both essential and reasonable.