GST S. 75(5) Provides for Maximum Three Adjournments, Not Necessarily Three Hearings: Delhi HC in Fraudulent ITC Case [Read Order]

In a recent ruling, the Delhi High Court has clarified that under the Section 75(5) of the Goods and Services Tax ( GST ) Act, 2017 merely sets a ceiling of three adjournments in assessment proceedings, but does not imply that three personal hearings must be mandatorily granted. The court was entertaining a case related to fraudulent Input Tax Credit ( ITC ).

The petitioner, SS Enterprises contended that the hearing notice was not duly served and argued that it was not connected to one Ms. Aaarti Kapoor, alleged to be linked with the firms from which the petitioner purportedly received goods-less invoices.

According to the department, the petitioner had availed fraudulent Input Tax Credit (ITC) amounting to ₹172 crores based on fake invoices issued by M/s. Shivaay Trading and Satyam Associates, both allegedly controlled by Ms. Kapoor.

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However, the High Court noted that the petitioner itself admitted in the writ petition that the notice of hearing, although delayed, had been received on 18th January 2025 before the final hearing date of 21st January 2025. As such, the petitioner had the opportunity to appear but failed to do so.

The petitioner also argued that it was denied three separate personal hearings.

The Court rejected this contention, pointing out that Section 75(5) of the CGST Act allows for a maximum of three adjournments when sufficient cause is shown, but it does not mandate that three hearings must be granted. The provision is intended to prevent abuse of process through excessive delays, not to guarantee a specific number of hearings.

The bench of Justice Prathiba M. Singh and Rajneesh Kumar Gupta stated that “In fact, a perusal of Section 75(5) of the Central Goods and Service Tax Act, 2017 (hereinafter, ‘CGST Act’) would show that the said provision merely contemplates that the maximum adjournments shall be given for three times but does not in effect mean that three hearings have to be given.”

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Considering that the impugned order is appealable under Section 107 of the CGST Act, the Court directed the petitioner to file an appeal before the Appellate Authority. It also instructed the department to provide all Relied Upon Documents (RUDs) within two weeks to the petitioner, enabling it to properly present its case.

The Court further clarified that if the appeal is filed within 30 days of receiving the RUDs, it shall not be dismissed on the ground of limitation and should be adjudicated on merits.

To Read the full text of the Order CLICK HERE

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