Delhi HC Pulls Up GST Authority For Fixing Hearing Only To Upload Order, Terms Practice "Inexplicable" [Read Order]

In the recent ruling, the Delhi High Court criticized the Goods and Service Tax (GST) Authorities for an inexplicable practice of issuing personal hearing notices for the purpose of uploading the orders rather than for the actual hearing of the parties.

The Petitioner, MS Jamil Trading Co, filed the petition under Article 226 of the Constitution of India challenging the impugned Order-in Original dated 23rd August, 2024 (impugned OIO) the impugned Order-in-Appeal dated 16th April, 2025 (impugned OIA).

A Show Cause Notice (SCN) dated 31st May, 2024, was issued to the Petitioner under Section 73 of theCentral Goods and Services Tax Act, 2017 raising additional tax demands and demands relating to ineligible Input Tax Credit (ITC) against the Petitioner. The Petitioner's primary grievance was that only 5 days were given to file a reply to the said SCN.

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The Section 73 of the Central Goods and Services Tax Act, 2017 explained that: Determination of tax ¹[, pertaining to the period up to Financial Year 2023-24,] not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts

“Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.”

The Impugned OIO was passedon23rdAugust, 2024, within a period of one week after the issuance of the SCN, confirming a tax demand of Rs. 3,36,42,865/- against the Petitioner. Aggrieved by the impugned OIO, the Petitioner filed an appeal on 21st December, 2024 and a notice of Personal hearing was served upon the Petitioner on 29th April, 2024 for a hearing on 30th April, 2024.

The Impugned OIA was passed on 16th April, 2024, prior to the date fixed for personal hearing. Thus, the Petitioner was not denied a proper opportunity of personal hearing in the appeal. The Petitioner had also duly made a pre-deposit before the Commissioner (Appeals) in furtherance of the appeal.

The Counsel for the Petitioner, Satendra Kumar and Pragyanshu Pandey, submitted that they were not given a proper and sufficient opportunity of personal hearing, both at the stage of the Order-in-Original and the Order-in-Appeal. The extremely short notice period for filing a reply to the SCN, coupled with the passing of the impugned OIA prior to the scheduled personal hearing added to the violation of procedural fairness.

On the other hand, the Counsel for the Respondent, Shashank Sharma, SSC, submitted that petitioner already possessed an alternative statutory remedy to approach the Goods and Services Tax Appellate Tribunal (GSTAT).

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The Bench of Delhi High Court consisted of Justice Prathiba M. Singh and Justice Renu Bhatnagar, heard and reviewed the matter filed by the petitioner.

The High Court, after considering the submissions made by both the counsels, was of the clear opinion that on both occasions, that in the impugned OIO as also in the impugned OIA, sufficient opportunity for personal hearing had not been granted to the Petitioner.

The Court further observed that the personal hearing notice which indicated that no personal hearing was granted before the Commissioner (Appeals) but a hearing was fixed for the purpose of uploading the order, was inexplicable and deserved to be re-looked at, as such a practice served no useful purpose.

Accordingly, the Impugned OIA dated 16th April, 2025 was set aside and the delay, if any, in filing the appeal, would be condoned. The court directed that Upon service of the personal hearing notice and after affording a proper hearing to the Petitioner, the appeal would be decided on merits and in accordance with law whereas all the rights and remedies of the parties were left open for determination.

Thus, the petition was disposed of.

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