Madras HC Sets Aside GST Demand, Holds Personal Hearing Mandatory Before Passing Assessment Order u/s 74 [Read Order]

The Madras High Court Madurai Bench has quashed the GST assessment orders passed under Section 74 of the Central Good and Service Act, 2017 holding that the failure to provide a personal hearing makes the assessment order legally unsustainable.

In the case of Kathiravan v. Commissioner of State Tax, the petitioner challenged the assessment orders passed on 08.01.2024 and 29.04.2024 for the assessment years 2017-18 and 2018-19 confirming the tax demands of ₹18.74 lakh and ₹9.40 lakh respectively.

The petitioner argued that although the replies to the show cause notices were personally submitted, they were not uploaded on the GST portal. The department passed the orders on the ground that no reply had been filed electronically without providing a personal hearing.

Representing the revenue department the Additional Government Pleader fairly admitted that no opportunity for personal hearing was given prior to passing the impugned orders.

Justice Krishnan Ramasamy held that “Passing an adverse order without giving personal hearing is nothing but violation of principles of natural justice.” The Court also held that the petitioner has deposited 25% of the disputed tax as directed earlier.

Therefore, the Court set aside the assessment orders and remitted the case for fresh adjudication directing the assessing officer to issue a notice to the petitioner fixing a date for personal hearing and pass a reasoned order.

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