# M/s Merino Industries Ltd., Hapur, U.P v. State of U.P. & Anr

- **Citation:** (2025) 4 ILRA 331
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-04-02
- **Case number:** Writ Tax No. 1406 of 2025
- **Bench:** Arun Bhansali, C.J. Kshitij Shailendra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-merino-industries-ltd-hapur-u-p-v-state-of-u-p-anr-53124
- **Pages:** 7

## Headnote

332 INDIAN LAW REPORTS ALLAHABAD SERIES
Civil Law - Uttar Pradesh Goods and
Services Tax Act, 2017 - Sections 74 &
75(4) - Writ of Certiorari - Principles of Natural
Justice - Opportunity of Personal Hearing -
Show Cause Notice - Violation of Mandatory
Procedural Requirements - Costs Imposed.

Held:

The petitioner, engaged in manufacturing
potato flakes, challenged an order dated
04.02.2025 under Section 74 of the U.P. GST
Act,
2017,
imposing
a
demand
of
Rs.5,82,67,589.12 for the period July 2017 to
March 2018, alleging misclassification of
potato flakes under tariff heading 2005-2000
instead of 1105-2000. A show cause notice
dated
03.08.2024
marked
the
personal
hearing date as 'NA' and required a reply by
19.08.2024. The petitioner's reply specifically
requested
a
personal
hearing,
but
the
impugned order was passed without granting
one, violating Section 75(4), which mandates
a hearing when requested in writing or when
an adverse decision is contemplated. Relying
on *Laskin Engineering Pvt. Ltd. v. State of
U.P.*, the Court held that denying a personal
hearing breached principles of natural justice
and
the
state's
own
circular
dated
13.06.2024. The order was quashed, the
matter was remanded for a fresh decision
with a hearing, and a cost of Rs.20,000 was
imposed on the Joint Commissioner SGST for
non-compliance, to be deposited with the
High Court Legal Services Committee within
four weeks.

Writ petition allowed.

Case Law Discussed:

## Text

4 All. M/s Merino Industries Ltd. Hapur, U.P. Vs. State of U.P. & Anr.
331
or mentioned while preparing the physical
verification report in MOV-04.

14. The purpose of filling MOV-04, at
the time of physical verification, is to find
the correctness of the goods in transit from
the accompanying documents and if the
officer while preparing the MOV-04 did
not find any change or difference in goods
that of mentioned in the accompanying
documents, the same cannot be permitted at
a later stage for taking a different stand, as
mentioned in the present case.

15. That this Court in the case of
Jitendra Kumar Vs. State of U.P. and
Another (Writ Tax No.1425 of 2023) in
para no. 5, 6 & 7 has held as under:-

"5. It is trite law, settled by a
catena of Supreme Court judgments, that
the Revenue cannot beat around the bush
and keep changing the goal post at each
stage. Once the Revenue had taken a
particular stand, the same cannot be
completely changed and/or supplemented
by a different reason or ground.

6. In the present case, it is clear
that the detention was made on the ground
that the goods were not accompanied by
valid documents. However, when the
show-cause notice was issued, there is
no whisper of any invalid document
whatsoever. In fact, the stand was
completely changed by the Revenue and
this volte face cannot be countenanced
by this Court. The detention of goods
causes serious prejudice to an assessee
and the same can only be done on the
basis of specific, valid and reasonable
grounds. In the present case, it is quite
obvious that at the time of detention,
the ground that was stated by the
Revenue was incorrect. More so, there
was no reason for the Revenue to have
detained the goods and the consequential
actions that followed, were obviously
vitiated.

7. In light of the findings above,
we are of the view that the detention order
and the subsequent show-cause notice were
bad in law, and accordingly, both are
quashed and set-aside."

16. In view of the facts as stated above
as well as in the light of the aforesaid
judgment, the impugned order cannot be
sustained in the eyes of law and the same is
hereby quashed.

17. The writ petition is allowed,
accordingly.

18. Any amount deposited by the
petitioner during the pendency of the
present litigation, shall be refunded to the
petitioner within a period of three weeks
from the date of production of certified
copy of this order.
----------
(2025) 4 ILRA 331
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 02.04.2025

BEFORE

THE HON'BLE ARUN BHANSALI, C.J.
THE HON'BLE KSHITIJ SHAILENDRA, J.

Writ Tax No. 1406 of 2025

M/s Merino Industries Ltd., Hapur, U.P.
 ...Petitioner
Versus
State of U.P. & Anr. ..Respondents

Counsel for the Petitioner:
Sri Anil Prakash Mathur

Counsel for the Respondents:
Ankur Agarwal (S.C.)
332 INDIAN LAW REPORTS ALLAHABAD SERIES
Civil Law - Uttar Pradesh Goods and
Services Tax Act, 2017 - Sections 74 &
75(4) - Writ of Certiorari - Principles of Natural
Justice - Opportunity of Personal Hearing -
Show Cause Notice - Violation of Mandatory
Procedural Requirements - Costs Imposed.

Held:

The petitioner, engaged in manufacturing
potato flakes, challenged an order dated
04.02.2025 under Section 74 of the U.P. GST
Act,
2017,
imposing
a
demand
of
Rs.5,82,67,589.12 for the period July 2017 to
March 2018, alleging misclassification of
potato flakes under tariff heading 2005-2000
instead of 1105-2000. A show cause notice
dated
03.08.2024
marked
the
personal
hearing date as 'NA' and required a reply by
19.08.2024. The petitioner's reply specifically
requested
a
personal
hearing,
but
the
impugned order was passed without granting
one, violating Section 75(4), which mandates
a hearing when requested in writing or when
an adverse decision is contemplated. Relying
on *Laskin Engineering Pvt. Ltd. v. State of
U.P.*, the Court held that denying a personal
hearing breached principles of natural justice
and
the
state's
own
circular
dated
13.06.2024. The order was quashed, the
matter was remanded for a fresh decision
with a hearing, and a cost of Rs.20,000 was
imposed on the Joint Commissioner SGST for
non-compliance, to be deposited with the
High Court Legal Services Committee within
four weeks.

Writ petition allowed.

Case Law Discussed:

1. *Laskin Engineering Pvt. Ltd. Vs S. of U.P.*,
Writ Tax No. 674 of 2024, (2024) AHC 32456 -
Opportunity of personal hearing is mandatory
under Section 75(4) before passing adverse
orders;
denial
violates
natural
justice,
warranting quashing of orders and potential
disciplinary action.

Observation:

The Court observed that the show cause notice's
indication of 'NA' for the personal hearing date,
despite a specific request in the petitioner's
reply, and the subsequent ex-parte order
demonstrated a mechanical approach by the
authorities, ignoring Section 75(4) and the
state's circular dated 13.06.2024, which
reiterated
the
*Laskin
Engineering*
mandate. The respondents' failure to justify
non-compliance in their instructions further
highlighted procedural lapses. The Court
noted recurring violations of natural justice
in GST proceedings, such as denying
hearings, setting improper hearing dates, or
ignoring replies, which burden the judiciary
and state resources. The imposition of costs
and a directive for training and disciplinary
action underscored the need for systemic
reform.

Result: Writ petition allowed; impugned
order dated 04.02.2025 quashed; matter
remanded for fresh decision with personal
hearing; cost of Rs.20,000 imposed on Joint
Commissioner SGST, to be deposited within
four weeks.

(Delivered by Hon'ble Arun Bhansali,
C.J.
&
Hon'ble Kshitij Shailendra, J.)

1. This petition has been filed by
the petitioner aggrieved of the order
dated
04.02.2025
passed
by
Joint
Commissioner, SGST, Corporate Circle
-1,
Ghaziabad
(Annexure-1)
under
Section 74 of Goods and Services Tax
Act, 2017 (for short, 'the Act') wherein,
a demand of Rs. 5,82,67,589.12/- has
been created.

2. It is inter alia indicated in the
petition that the petitioner is engaged in
manufacture and supply of potato flakes
besides other items. A show cause
notice dated 03.08.2024 for the period
July 2017 to March 2018, proposing to
classify the product in question i.e.
potato flakes under tariff heading 2005-
4 All. M/s Merino Industries Ltd. Hapur, U.P. Vs. State of U.P. & Anr.
333
2000 instead of 1105-2000 was issued.
In the notice, date by which the reply
was required to be submitted was
indicated as 19.08.2024 and in column
pertaining to date of personal hearing
'NA' was indicated and the same was the
position pertaining to column pertaining to
time of personal hearing.

3. A reply to the notice dated
03.08.2024 was filed by the petitioner
through counsel on 19.08.2024 contesting
the allegations made therein. In the reply, a
specific prayer was made on behalf of the
petitioner that no adverse order to the
prejudice of the petitioner be passed
without affording him an opportunity of
hearing.

4. However, by the order impugned
dated 04.02.2025, without affording any
opportunity of hearing, the demand has
been created.

5. It is submitted by learned counsel
for the petitioner that the action of the
respondents
in
passing
the
order
impugned,
without
affording
any
opportunity of hearing to the petitioner is
ex-facie contrary to the provisions of
Section 75(4) of the Act. It was
emphasized
that
the
section
which
pertains to general provisions relating to
determination of tax under sub-Section
(4) clearly provides 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.

6. Despite the mandatory requirement
of law, the show cause notice in the column
pertaining to the date of personal hearing
indicated 'NA' and despite specific prayer
made in response to the show cause notice
for
providing
personal
hearing,
no
opportunity of personal hearing was
provided which action besides being
contrary to the provisions of the Act, is
contrary to the Circular dated 13.06.2024
issued by the Additional Commissioner
Law, Commercial Tax, U.P. specifically
referring to the judgement of this Court in
the case of Laskin Engineering Pvt. Ltd.
Vs. State of U.P. and Another : Writ Tax
No. 674 of 2024, decided on 16.05.2024.
The respondent has indulged in violation of
provisions of law as well as the directions
given by this Court and the State and,
therefore, the order impugned deserves to
be quashed and set aside.

7. Learned Standing Counsel has
produced instructions wherein comments
have been offered on the merit of the
dispute and not a word has been indicated
as to why the mandatory provisions of
Section 75(4) of the Act have not been
complied with.

8. This Court in the case of Laskin
Engineering Pvt. Ltd. (supra) inter alia
observed and directed as under:

"5. It is basic to procedural law
under taxing statutes that opportunity of
personal hearing must be provided to an
assessee
before
any
assessment/adjudication order is passed
against him. Thus, we find it strange and
wholly unacceptable merely because the
substantive law has changed, the revenue
authorities have changed their approach
and are failing to observe that mandatory
requirement of procedural law. They have
thus denied opportunity of hearing to the
assessee.

6. Section 75(4) of the Act reads
as below:
334 INDIAN LAW REPORTS ALLAHABAD SERIES

"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."

7. It transpires from the record,
neither the adjudicating authority issued
any further notice to the petitioner to show
cause or to participate in the oral hearing,
nor he granted any opportunity of personal
hearing to the petitioner.

8. On query made, the learned
Additional Chief Standing Counsel fairly
submits, in light of similar occurrences,
noticed in other litigation, he had apprised
the Commissioner, Commercial Tax. In
turn, the Commissioner, Commercial Tax,
Uttar Pradesh, has issued Office Memo No.
1406 dated 12.11.2024. The same has been
addressed to all Additional Commissioner
to be communicated to all field formations
for necessary compliance. It reads as
below:

"1. The column in which date of
personal hearing has to be mentioned, only
N.A. is mentioned without mentioning any
date.

2. The column in which time of
personal hearing has to be mentioned, only
N.A. is mentioned without mentioning time
of hearing.

3. In some cases, the date of
personal hearing is prior to which reply to
the Show Cause Notice has to be submitted
this is non-est and this practice has to be
discontinued. The date of reply to the Show
Cause Notice has to be definitely prior to
the date of personal hearing.

4. In some cases, the date of
personal hearing is on the same date to
which reply to the Show Cause Notice has
to be submitted-this is non-est and this
practice has to be discontinued. The date of
reply to the Show Cause Notice has to be
definitely prior to the date of personal
hearing.

5. In all cases observed, the date
of passing order either u/s 73(9)/74(9) etc.
of the Act is not commensurate to the date
of personal hearing. It is trite law that the
date of the order has to be passed on the
date of personal hearing. For eg.,the date
of furnishing reply to SCN is 15.11.2023
and date of personal hearing is 17.11.2023,
then the date of order has to be
17.11.2023"

9. In view of the facts noted
above, before any adverse order passed in
an
adjudication
proceeding,
personal
hearing must be offered to the noticee. If
the noticee chooses to waive that right,
occasion may arise with the adjudicating
authority, (in those facts), to proceed to
deal with the case on merits, ex-parte. Also,
another situation may exist where even
after grant of such opportunity of personal
hearing, the noticee fails to avail the same.
Leaving such situations apart, we cannot
allow a practice to arise or exist where
opportunity of personal hearing may be
denied to a person facing adjudication
proceedings.

10. Thus, the impugned order
cannot be sustained in the eyes of law. It
has been passed in gross violation of
fundamental principles of natural justice.
The self imposed bar of alternative remedy
cannot be applied in such facts. If applied,
it would be of no real use. In fact, it would
be counter productive to the interest of
justice. Here, it may be noted, the appeal
authority does not have the authority to
remand the proceedings.

11. Accordingly, the writ petition
is
disposed
of
with
the
following
observations/directions :

(i) The impugned order dated
19.08.2021 passed by the respondent no. 2Deputy Commissioner, Commercial Tax
4 All. M/s Merino Industries Ltd. Hapur, U.P. Vs. State of U.P. & Anr.
335
Department, Sikandrabad, Bulandshahar,
is hereby set-aside.

(ii) The matter is remitted to the
respondent
no.2-Deputy
Commissioner,
Commercial Tax Department, Sikandrabad,
Bulandshahar to pass a fresh order, in
accordance with law, after affording due
opportunity of hearing to the petitioner.

12. While, we proposed to impose
heavy costs for the conduct offered by the
respondent no. 2, we have been assured by
the learned Additional Chief Standing
Counsel, such occurrences will not be
repeated in future.

13. Accordingly, we direct the
Commissioner, Commercial Tax, Uttar
Pradesh to undertake remedial measures
including
providing
for
disciplinary
proceedings against erring officials, where
fundamental principles of natural justice
may be violated by the adjudicating
authorities, without justifiable reason. "

9. It appears that pursuant to the
direction issued by this Court, the office of
the Commissioner issued Circular to all
Additional Commissioners, Commercial
Taxes quoting paragraph nos. 9 to 13 of the
judgement
in
the
case
of
Laskin
Engineering
Pvt.
Ltd.
(supra)
and
directed as under:

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10. From the above, it would be
observed that this Court referring to office
memo dated 12.11.2023 (wrongly typed as
12.11.2024) has found that Court cannot
allow a practice to arise or exist where
opportunity of personal hearing has been
denied to a person facing adjudication
proceedings. The Court also observed, that
it proposed to impose heavy cost for the
conduct of the officer, however, on an
assurance given by the Additional Chief
Standing Counsel that such occurrences
will not be repeated in future, it was
directed that remedial measures including
disciplinary proceedings against erring
officials
would
be
taken
by
the
respondents.

11. It is observed that besides the
above, numerous petitions are being filed
every day reflecting the gross violation of
principles of natural justice by the officers
wherein apparently as the entire procedure
is online, the officers working in a wholly
mechanical manner without adverting to
the material available on record i.e. in their
own system in electronic form, orders are
being passed wherein in show cause
notices, opportunity of hearing is being
denied, the same dates are being fixed of
filing reply and that of personal hearing,
date of personal hearing is being fixed prior
to the date of filing reply, cases where the
reply has been filed, in the orders passed, it
is indicated that no reply has been filed, if
in a show cause notice, a date of hearing is
fixed, in the reply filed by the assessee, the
column pertaining to 'option for personal
hearing' invariably, on account of the
336 INDIAN LAW REPORTS ALLAHABAD SERIES
system, indicates 'No' i.e. opportunity
of personal hearing is refused by the
assessee, even in cases where reply
specifically
requires
providing
opportunity of personal hearing, the
same is being ignored and orders are
being passed in a wholly mechanical
manner without adverting to the facts
of the case i.e. only referring to the
date
of
show
cause
notice
and
confirming the demands. Innumerable
cases have come before this Court
where show cause notices have been
issued and ex-parte assessments made
after the cancellation of the GST
registration of the firm, based on
uploading of notices on the portal,
without ensuring personal service of
the notices. Such conduct of the
officers
in
dealing
with
matters,
besides resulting in huge loss of time
on the part of the State Government,
the
same
unnecessarily
increases
burden
of
this
Court
wherein
numerous
petitions
every
day,
underlying violation of principles of
natural justice, are being filed and as
violations are so glaring, this Court is
left with no option but to allow the
petitions and remand back the matters
to the authorities

12. The present case provides a
glaring example of such conduct on
the part of the officers of the State
wherein besides denying opportunity
of personal hearing in the show cause
notice by indicating 'NA' in the
column pertaining to date of personal
hearing, despite specific prayer made
for providing opportunity of hearing
in reply, the order impugned has been
passed
without
affording
any
opportunity of hearing.

13. In view of above fact situation, we
are left with no option but to allow the
petition filed by the petitioner with costs.

14. Consequently, the writ petition is
allowed.
The
order
impugned
dated
04.02.2025 (Annexure-1) is quashed and
set aside. The matter is remanded back to
the Joint Commissioner SGST, Corporate
Circle-1, Ghaziabad, respondent no. 2 for
passing a fresh order after affording an
opportunity of personal hearing to the
petitioner.

15. A cost of Rs. 20,000/- is imposed
on
the
Joint
Commissioner
SGST,
Corporate Circle-1, Ghaziabad, who had
issued the show cause notice dated
03.08.2024 and had passed the order dated
04.02.2025.

16. The cost shall be deposited by the
officer with the High Court Legal Services
Committee, High Court Allahabad within a
period of four weeks.

17. It will be the responsibility of
learned Standing Counsel to communicate
this order to the officer concerned as well
as to the Commissioner, Commercial Tax,
U.P., who is further directed to ensure that
a proper training is imparted to the officers
to deal with the matters in a proper manner
as apparently circulars issued to the said
officers have been ignored and/or have not
been adverted to.

18. Further, as already suggested in
the case of Laskin Engineering Pvt. Ltd.
(supra), disciplinary proceedings may be
initiated against erring officials failing
which it is apparent that the State would
continue to suffer on account of such acts
of omissions and commissions by the
4 All. M/s B M Computers Vs. Commissioner, Commercial Taxes Lucknow & Ors.
337
officers, which position should not be
tolerated by the State.
----------

(2025) 4 ILRA 337
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.04.2025

BEFORE

THE HON'BLE ROHIT RANJAN AGARWAL, J.

Writ Tax No. 1559 of 2024

M/s B M Computers ...Petitioner
Versus
Commissioner, Commercial Taxes
Lucknow & Ors. ...Respondents

Counsel for the Petitioner:
Ms. Pooja Talwar

Counsel for the Respondents:
C.S.C.

Civil Law - Uttar Pradesh Goods and
Services Tax Act, 2017 - Section
129(3) - Rule 138 - Writ of Certiorari
- Goods in Transit - E-Way Bill - Part
B Non-Compliance - Intention to
Evade Tax - Mandatory Procedural
Requirements
-
Post-April
2018
Transactions.

Held:
The petitioner, a registered dealer in
computer
hardware,
challenged
a
penalty order dated 06.03.2023 under
Section 129(3) of the U.P. GST Act,
2017, and an appellate order dated
30.05.2024, for goods intercepted on
06.03.2023 at Luharli Toll Plaza,
Greater Noida. The goods, transferred
from
Agra
to
Ghaziabad,
were
accompanied by tax invoices and e-way
bills, but Part B of e-way bill no.
411318901103 was not filled, and eway bill no. 411318916631 incorrectly
showed movement from Agra to Agra
instead of Agra to Noida. The Court
held that post the 14th Amendment to
the U.P. GST Rules, 2017 (effective
01.04.2018), a complete e-way bill,
including Part B, is mandatory under
Rule 138. Non-compliance raises a
rebuttable presumption of tax evasion,
which the petitioner failed to rebut, as
Part B was generated post-interception
and the e-way bill misstated the
destination.
Relying
on
*Akhilesh
Traders* and *Jhansi Enterprises*, the
Court upheld the penalty, finding an
intent to evade tax, and dismissed the
petitioner's reliance on pre-April 2018
cases as distinguishable. The writ
petition was dismissed, as no case for
interference was made out.

Writ petition dismissed.

Case Law Discussed:

1. *Akhilesh Traders Vs St. of U.P.*,
Writ Tax No. 1109 of 2019, (2024)
AHC 18765 - Non-compliance with eway bill requirements post-April 2018
raises a presumption of tax evasion,
rebuttable by the owner/transporter;
subsequent document production does
not absolve liability.

2. *Jhansi Enterprises Vs St. of U.P.*,
Writ Tax No. 1081 of 2019, (2024)
AHC
15432
-
Post-April
2018,
complete e-way bill is mandatory;