GST Order Liable to Be Set Aside When No Hearing u/s 75(4) is Provided: Madras HC [Read Order]

The Madras High Court has held that a GST ( Goods and Services Tax ) order is liable to be quashed if the taxpayer is not provided with a mandatory personal hearing as required under Section 75(4) of the Central Goods and Services Tax Act, 2017.

A writ petition was filed by Roop Rajat Exports, a small export business based in Krishnagiri, Tamil Nadu, challenging a tax demand order dated 18 July 2023 passed by the Assistant Commissioner, Krishnagiri-II Circle.

The petitioner argued that although the department had sent show cause notices to its registered email ID, it was unaware of their issuance and consequently failed to file objections within the stipulated time.

In addition, it was submitted that the authorities did not issue a personal hearing notice before finalising the adverse assessment order and the consequential demand, which directly violated Section 75(4). The provision makes it mandatory for the department to grant a reasonable opportunity of being heard to the taxpayer when an adverse decision is proposed.

During the hearing, the Government Advocate appearing for the GST Department admitted that while notices were indeed sent electronically, no personal hearing was provided to the petitioner.

Justice Krishnan Ramasamy, after hearing the submissions, observed that passing an order without affording a hearing goes against the express statutory mandate and the basic tenets of natural justice.

The Court noted that communication through email alone is insufficient when it results in a party losing their right to present their case in person.

The Court accepted the petitioner’s willingness to deposit 25% of the disputed tax to demonstrate bona fide conduct. Accordingly, it set aside the impugned assessment and consequential demand order and directed the department to reconsider the case afresh.

The bench instructed that the petitioner must first pay 25% of the disputed tax within four weeks, submit a reply with supporting documents, and the department must then grant a 14-day notice for a personal hearing before passing a fresh order on merits.

Accordingly, the petition was disposed of.

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