Facts of the Case

The petitioner, M/s Star Medical Store, challenged the assessment order passed under Section 73 of the GST Act, 2017 along with FORM GST DRC-07 dated 20.02.2025, as well as the Show Cause Notice issued in FORM GST DRC-01 dated 19.11.2024. The principal grievance was that the adjudicating authority fixed the date of personal hearing before the last date prescribed for filing the reply to the Show Cause Notice, thereby depriving the petitioner of an effective opportunity to present its defence and violating the principles of natural justice.

 

Issues Involved

  1. Whether fixing the date of personal hearing before the expiry of the time allowed for filing the reply to the Show Cause Notice violates the principles of natural justice.
  2. Whether an assessment order passed following such defective procedure is sustainable under Section 73 of the GST Act, 2017.
  3. Whether the matter should be remanded for fresh adjudication after granting a proper opportunity of hearing.

 

Petitioner’s Arguments

  • The assessment proceedings were conducted in complete disregard of the principles of natural justice.
  • The date fixed for personal hearing was earlier than the last date available for submission of the reply to the Show Cause Notice.
  • Consequently, the personal hearing provided was merely illusory and deprived the petitioner of a meaningful opportunity to defend the case.
  • Reliance was placed upon the earlier judgment of the Uttarakhand High Court in M/s Abuturrab Agencies v. The Commissioner, State Tax and Another (Writ Petition (M/B) No.166 of 2026, decided on 17.03.2026), wherein similar procedural irregularity was held to be unsustainable.

 

Respondent’s Arguments

The Revenue fairly conceded before the Court that the personal hearing had been fixed 14 days prior to the last date prescribed for filing the reply, and therefore, the hearing granted was not in conformity with the prescribed procedure and could not be regarded as an effective opportunity of hearing.

 

Court Order / Findings

The Uttarakhand High Court held that:

  • Fixing the personal hearing before the expiry of the reply period amounted to denial of a meaningful opportunity of hearing.
  • Such procedure violated the principles of natural justice.
  • Since the hearing was only illusory, the assessment order could not be sustained.
  • The assessment order passed under Section 73 was quashed.
  • The matter was remitted back to the Adjudicating Authority to proceed afresh from the stage of the Show Cause Notice after fixing a proper date of personal hearing in accordance with law.
  • The writ petition was accordingly disposed of.

 

Important Clarification

This judgment reiterates that:

  • A personal hearing must be meaningful and effective, not merely a procedural formality.
  • The taxpayer must first be given the complete statutory time to submit the reply to the Show Cause Notice.
  • Fixing the hearing before expiry of the reply period renders the hearing illusory and vitiates the entire adjudication process.
  • Assessment orders passed in violation of these procedural safeguards are liable to be quashed for breach of natural justice.
  • The Court reaffirmed the principle laid down in M/s Abuturrab Agencies v. The Commissioner, State Tax and Another, emphasizing strict compliance with procedural fairness during GST adjudication.

 

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017
  • FORM GST DRC-01 (Show Cause Notice)
  • FORM GST DRC-07 (Summary of Assessment Order)
  • Principles of Natural Justice


Link to download the order -

https://www.mytaxexpert.co.in/uploads/1783065510_401.pdf 

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