Facts of the Case

  • The petitioner, M/s Star Medical Store, is a registered entity under the Goods and Services Tax regime.
  • The Revenue Department (Respondent No. 1) issued a Show Cause Notice (SCN) along with FORM DRC-01 bearing reference no. ZD050524017806G dated 22.05.2024 under Section 73 of the GST Act, 2017.
  • Subsequently, without affording a meaningful opportunity for a personal hearing after the completion of pleadings, the Respondent passed an assessment order under Section 73 along with FORM DRC-07 bearing reference no. ZD050824014333Q dated 21.08.2024.
  • Aggrieved by the absolute disregard for administrative fairness and statutory mandates, the petitioner approached the Hon'ble High Court of Uttarakhand at Nainital by filing Writ Petition (M/B) No. 450 of 2026, seeking the quashing of both the SCN and the final assessment order.

Issues Involved

  • Whether the action of the Adjudicating Authority in scheduling and fixing the date of personal hearing a total of 18 days prior to the last date designated for submitting the written reply constitutes a valid opportunity of being heard?
  • Whether the impugned assessment order passed under Section 73 of the GST Act, 2017 violates the core principles of natural justice (audi alteram partem), rendering the resultant order illusory, fundamentally flawed, and legally unsustainable?

Petitioner’s Arguments

  • The learned counsel appearing for the petitioner, Mr. Pankaj Tiwari, vehemently argued that the entire adjudication procedure adopted by the respondent authority was wholly illegal, arbitrary, and upside-down.
  • It was submitted that a personal hearing can only yield fruitful results after the written submissions/replies are taken on record, whereas in this instance, the date for a personal hearing was fixed well before the expiration of the timeline given to file the reply.
  • The petitioner placed strong reliance on the judicial precedent set by the same High Court in its order dated 17.03.2026 passed in Writ Petition (M/B) No. 166/2026 ("M/s Abuturrab Agencies v. The Commissioner, State Tax and another"), where identical procedural lapses were condemned.

Respondent’s Arguments

  • Ms. Puja Banga, the learned Brief Holder representing the State Revenue through Video Conferencing, evaluated the statutory record and the timeline of notices.
  • Demonstrating high professional standards and fairness, the learned counsel for the Revenue very fairly conceded to the factual positioning of the case.
  • The Revenue admitted that because the date for a personal hearing was structured 18 days prior to the last date fixed for submitting the written response, the opportunity for a hearing was functionally "illusory" and failed to conform with prescribed lawful procedures.

Court Order / Findings

  • The Division Bench, comprising Hon'ble Chief Justice Mr. Manoj Kumar Gupta and Hon'ble Justice Mr. Subhash Upadhyay, took note of the Revenue's fair concession and the arbitrary nature of the timeline.
  • The Court held that offering a personal hearing before the deadline for filing a written reply expires is a structural error that strips the taxpayer of their right to defend themselves properly, making the hearing completely hollow.
  • Consequently, the Hon'ble High Court quashed the impugned Assessment Order passed under Section 73 and FORM DRC-07.
  • The matter has been remitted back to the Adjudicating Officer with a clear directive to resume proceedings from the stage of the Show Cause Notice, ensuring a proper date for a personal hearing is fixed only after the response timeline. The writ petition was accordingly disposed of.

Important Clarification

  • The Chronological Necessity of Natural Justice: This judgment clarifies that a personal hearing cannot be treated as a mere administrative checkbox to be completed prematurely. A personal hearing must happen after or alongside the final accumulation of written defenses, ensuring the authority evaluates the taxpayer's completed arguments. Scheduling a hearing 18 days before the reply deadline effectively denies the taxpayer their right to be heard.

Section Involved

  • Section 73 of the Central Goods and Services Tax (CGST) Act, 2017 / Uttarakhand Goods and Services Tax (SGST) Act, 2017: Deals with the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts.

Link to download the order – https://mytaxexpert.co.in/uploads/1783061165_330compressed.pdf

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