Facts of the Case

  • The petitioner, M/s Star Medical Store, is a registered entity under the Goods and Services Tax laws.
  • The Respondent (Assistant Commissioner, State Goods & Service Tax) issued a Show Cause Notice (SCN) along with FORM DRC-01 bearing reference no. ZD0503250148897 dated 26.03.2025 under Section 73 of the GST Act, 2017.
  • Following the notice, the respondent authority passed an assessment/impugned order under Section 73 along with FORM DRC-07 bearing reference no. ZD050425013915J dated 26.04.2025.
  • The critical procedural timeline adopted by the department revealed that the specific date scheduled for the petitioner’s personal hearing was structured prior to the final date allowed for submitting the written reply to the Show Cause Notice. Specifically, the personal hearing date was designated 9 days before the last date fixed for filing the reply.
  • Aggrieved by this sequence, which effectively denied a fair opportunity to contest the allegations, the petitioner approached the Hon'ble High Court of Uttarakhand via Writ Petition (M/B) No. 449 of 2026 seeking the quashing of both the SCN and the final assessment order.

Issues Involved

  • Whether the action of the Adjudicating Authority in fixing the date for a personal hearing before the expiration of the deadline for submitting the written reply to a Show Cause Notice violates the principles of natural justice.
  • Whether a personal hearing offered 9 days prior to the last date of filing a response can be deemed legally sustainable or if it must be rejected as an "illusory hearing".
  • Whether the impugned assessment order passed under Section 73 of the GST Act, 2017, warrants quashing due to procedural illegalities that compromise the right to a fair hearing.

Petitioner’s Arguments

  • The learned counsel appearing for the petitioner, Mr. Pankaj Tiwari, vehemently argued that the entire procedure implemented by the respondent authority was wholly illegal, arbitrary, and in complete disregard of the fundamental principles of natural justice.
  • It was contended that a personal hearing can only serve its legal purpose after the noticee has filed their reply, allowing the officer to understand the disputed points. Scheduling the hearing before the reply submission date nullified the utility of the defense.
  • To substantiate this contention, the petitioner placed heavy reliance on the judicial precedent set by the same High Court in the 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 similar structural anomalies were declared void.
  • The petitioner prayed for the matter to be remitted back so that an authentic, effective opportunity of being heard could be granted after taking all written submissions and documents into account.

Respondent’s Arguments

  • Ms. Puja Banga, the learned Brief Holder representing the State through Video Conferencing, appeared on behalf of the Revenue.
  • Upon reviewing the record and statutory timelines, the counsel for the Revenue very fairly conceded to the procedural lapse.
  • The Revenue admitted that since the date designated for the personal hearing was scheduled 9 days prior to the final deadline given to the taxpayer for filing their reply, the opportunity presented failed to satisfy standard administrative procedures.
  • It was acknowledged that such an arrangement presumably offered an opportunity that was merely "illusory" and did not conform to the fair procedure prescribed under the law.

Court Order / Findings

  • The Division Bench comprising The Hon'ble Chief Justice Mr. Manoj Kumar Gupta and The Hon'ble Justice Mr. Subhash Upadhyay observed that the sequence of scheduling the personal hearing before the reply deadline stripped the proceedings of fair play.
  • The High Court accepted the fair concession made by the Revenue's counsel that an advance hearing date relative to the response timeline makes the opportunity completely illusory and legally invalid.
  • Consequently, the Hon'ble High Court quashed the impugned Assessment Order passed under Section 73 along with FORM DRC-07.
  • The Court remitted the matter back to the Adjudicating Officer with a directive to revive and proceed with the case directly from the stage of the Show Cause Notice.
  • The Adjudicating Officer was explicitly directed to complete the process only after fixing a fresh, logical date for a personal hearing, thereby ensuring the petitioner receives a fair opportunity to present their case. The writ petition and all connected pending applications were disposed of accordingly.

Important Clarification

Key Legal Takeaway: This judgment reinforces that under the GST framework, procedural compliance is not a mere formality. Offering a personal hearing before the deadline for filing a reply expires is an "illusory hearing." The proper sequence requires the taxpayer to be given time to file their reply first, followed by a personal hearing so that the arguments can be meaningfully understood and adjudicated by the officer.

Section Involved

  • Section 73 of the Central / State Goods and Services Tax (GST) 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/1783062396_340compressed.pdf

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