Madras HC Rules Against Revenue Dept: GST Demand Invalid as Tax Officer Ignored Adjournment Request [Read Order]

In a significant ruling, the Madurai Bench of the Madras High Court set aside GST demand orders issued against TVL. PVK Constructions after finding that the tax authorities had passed the order without considering the taxpayer’s request for adjournment. The petitioner, TVL. PVK Constructions, represented by its proprietor Perumal Vijayakumar, had challenged the demand order dated 23.08.2024 and the subsequent rejection of the rectification application dated 13.01.2025, both issued by the State Tax Officer-1 (Inspection), Trichy Division.

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The case arose from a show-cause notice issued on 14.06.2024 following a surprise inspection, wherein discrepancies were alleged in the input tax credit claimed and turnover reported by the petitioner for the relevant period. A reminder notice was later issued on 19.07.2024, fixing a personal hearing for 26.07.2024. The petitioner responded by submitting an adjournment request on 01.08.2024, seeking time to furnish a detailed reply along with supporting documents. However, the respondent proceeded to pass the order under Section 74 of the CGST Act on 23.08.2024, confirming the proposed demand without taking into account the pending adjournment request.

The petitioner contended that the impugned orders were issued in violation of the principles of natural justice and drew attention to the fact that a rectification application in relation to a prior year involving similar issues had been accepted by the same authority. Despite this, the rectification application for the subsequent period was rejected without providing any reasons.

The Revenue argued that sufficient time was provided for response and appearance, and the order was passed due to the petitioner’s failure to attend the hearing. However, the Court found that the petitioner’s request for adjournment had been placed on record and not considered, and the order had been passed in disregard of the petitioner’s opportunity to respond.

Justice Vivek Kumar Singh observed that failure to consider the adjournment request amounted to a violation of natural justice and that the authority ought to have provided a personal hearing before finalising the demand. The Court held that the demand order and the subsequent rejection of the rectification request could not be sustained.

Referring to the Supreme Court’s decision in State of Orissa v. Binapani Dei (1967), the Court reiterated that an administrative order that has civil consequences must adhere to principles of natural justice, including fair hearing.

Accordingly, the High Court quashed the impugned orders and remanded the matter back to the State Tax Officer for fresh consideration. The petitioner was directed to file a detailed reply within one week, and the officer was instructed to pass a reasoned and speaking order after granting personal hearing within three weeks thereafter.

To Read the full text of the Order CLICK HERE

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