Facts of the Case

  • The petitioner, M/s Star Medical Store, was served with a Show Cause Notice (SCN) along with FORM DRC-01 bearing reference no. ZD0511240012428U dated 19.11.2024 by Respondent No. 1 under Section 73 of the GST Act, 2017.
  • Subsequently, Respondent No. 1 passed an assessment/impugned order under Section 73 of the GST Act, 2017 along with FORM DRC-07 bearing reference no. ZD050225014966F dated 20.02.2025, confirming a tax demand against the petitioner.
  • Aggrieved by the ex-parte assessment order, the petitioner filed a Writ Petition $(M/B)$ No. 451 of 2026 before the Hon'ble High Court of Uttarakhand at Nainital.
  • The primary grievance of the petitioner was that the Adjudicating Authority scheduled and completed the date of the personal hearing before the actual expiry of the last date allowed for submitting the written reply to the show cause notice. This mechanical approach effectively denied them a reasonable opportunity to defend their case.

Issues Involved

  1. Whether scheduling a personal hearing prior to the deadline fixed for filing a written reply to a Show Cause Notice violates the principles of natural justice and renders the opportunity of being heard completely illusory?
  2. Whether the impugned assessment order passed under Section 73 of the GST Act, 2017 along with FORM DRC-07 is legally sustainable when statutory procedures governing reasonable opportunity are bypassed?

Petitioner’s Arguments

  • The learned counsel for the petitioner, Mr. Pankaj Tiwari, vehemently argued that the entire adjudication procedure adopted by the respondent was fundamentally flawed and wholly illegal.
  • It was submitted that the date for the personal hearing was pre-emptively fixed before the last date for filing the written reply had even expired. This procedural anomaly stripped the petitioner of their right to present a comprehensive defense alongside their documentary evidence.
  • To substantiate this stance, the petitioner placed reliance on a coordinate bench ruling of the same High Court 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 a similar deprivation of natural justice was set aside.

Respondent’s Arguments

  • Ms. Puja Banga, the learned Brief Holder appearing for the State of Uttarakhand via video conferencing, represented the Revenue department.
  • Upon reviewing the factual timeline of the case records, the learned counsel for the Revenue very fairly conceded to the procedural lapse.
  • The Revenue admitted that since the date for the personal hearing was inexplicably fixed 14 days prior to the last date designated for filing the written reply, the personal hearing offered to the taxpayer was presumably illusory and did not conform to the established statutory and legal procedures prescribed under the GST regime.

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 patent violation of legal principles.
  • The Court held that offering a personal hearing before the deadline for filing a reply defeats the very purpose of a hearing, as the authority cannot consider the taxpayer's written defense during such an illusory interaction.
  • Consequently, the High Court quashed the impugned Assessment Order passed under Section 73 and FORM DRC-07.
  • The matter was remitted back to the Adjudicating Officer with specific directions to proceed de novo from the stage of the show cause notice.
  • The Court ordered the authority to fix a fresh and proper date for a personal hearing, allowing the petitioner to file their submissions and documents for fair consideration. The writ petition and all pending applications were accordingly disposed of.

Important Clarification

Key Legal Takeaway: This ruling clarifies that the right to a personal hearing under the GST framework is not a mere textbook formality to be ticked off mechanically. A personal hearing scheduled prior to the submission window closing for a written reply is "illusory" in the eyes of law. Effective natural justice dictates that an assessee must first be allowed to submit their reply, followed by a personal hearing where those written arguments can be expanded upon and evaluated by the officer.

Section Involved

  • Section 73 of the Central Goods and Services Tax (CGST) Act, 2017 / Uttarakhand State Goods and Services Tax (SGST) Act, 2017: Deals with the determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilized for any reason other than fraud, willful misstatement, or suppression of facts.
  • Section 75(4) of the CGST/SGST Act, 2017 (Implied): Mandates providing an opportunity of personal hearing where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

Link to download the order - https://mytaxexpert.co.in/uploads/1783062566_341compressed.pdf

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