Facts of the Case

The petitioner, M/s. Suvarna Traders, challenged the assessment order dated 05.05.2022 passed by the Assistant Commissioner (State Tax), Maredpally Circle, Hyderabad, whereby excess Input Tax Credit (ITC) amounting to Rs.41,10,622 under CGST and an equivalent amount under SGST was confirmed, resulting in a total demand of Rs.82,21,244.

The petitioner contended that although a show cause notice had been issued, no notice of personal hearing was ever served, and therefore the assessment order was passed in complete violation of the principles of natural justice. The petitioner also stated that its GST registration had already been cancelled on 19.01.2021, due to which it could not access the GST common portal for receiving any uploaded notices.

The respondents submitted that the show cause notice as well as the notice of personal hearing had been uploaded on the GST common portal, which constituted valid service under Section 169 of the CGST Act.

 

Issues Involved

  1. Whether an adjudication order confirming GST demand can be passed without granting a personal hearing when an adverse order is proposed.
  2. Whether uploading notices on the GST common portal constitutes valid service when the taxpayer claims inability to access the portal due to cancellation of registration.
  3. Whether failure to provide an effective opportunity of hearing violates Section 75(4) of the CGST Act and the principles of natural justice.

 

Petitioner's Arguments

  • The impugned assessment order was passed without issuing any notice of personal hearing.
  • The order was therefore violative of Section 75(4) of the CGST Act, which mandates granting an opportunity of hearing before passing an adverse order.
  • The petitioner's GST registration had already been cancelled on 19.01.2021, making it impossible to access the GST portal for viewing any uploaded notices.
  • Consequently, the assessment order deserved to be set aside for violation of principles of natural justice and constitutional safeguards under Articles 14 and 19(1)(g).

 

Respondent's Arguments

  • The department submitted that the show cause notice dated 30.04.2021 and reminder dated 02.06.2021 had been duly issued.
  • It was argued that both the show cause notice and the notice of personal hearing were uploaded on the GST common portal.
  • According to the department, uploading notices on the common portal is a recognised mode of service under Section 169 of the CGST Act, 2017.
  • The department further relied upon investigation records suggesting that the petitioner had not carried out genuine business activities and had allegedly passed on GST credit without actual supply of goods.

 

Court Findings / Order

The Telangana High Court observed that Section 75(4) of the CGST Act contemplates two situations requiring grant of personal hearing:

  • where the taxpayer specifically requests a hearing; and
  • where any adverse decision is proposed against the taxpayer.

The Court held that whenever an adverse order is contemplated, granting an opportunity of personal hearing becomes mandatory.

Considering the petitioner's contention regarding cancellation of GST registration and inability to access the GST portal, the Court found that the interest of justice required granting another opportunity of hearing.

Accordingly, the High Court:

  • set aside the assessment order dated 05.05.2022;
  • remanded the matter to the Assistant Commissioner (State Tax);
  • directed that the impugned order itself shall be treated as a show cause notice;
  • directed the petitioner to submit its reply within 15 days; and
  • directed the assessing authority to pass a fresh order after providing due opportunity of hearing, including personal hearing, in accordance with law.

 

Important Clarification

  • Personal hearing is mandatory under Section 75(4) whenever an adverse GST order is proposed.
  • Mere uploading of notices on the GST portal may not be sufficient in circumstances where the taxpayer demonstrates inability to access the portal.
  • Courts continue to protect the principles of natural justice in GST adjudication proceedings.
  • Assessment orders passed without effective opportunity of hearing are liable to be quashed and remanded.
  • Authorities must ensure compliance with procedural safeguards before confirming GST demands.

Sections Involved

  • Section 75(4) of the Central Goods and Services Tax Act, 2017
  • Section 169 of the Central Goods and Services Tax Act, 2017
  • Article 226 of the Constitution of India
  • Article 14 of the Constitution of India
  • Article 19(1)(g) of the Constitution of India

 

Link to download the order:https://www.mytaxexpert.co.in/uploads/1783931414_190compressed.pdf

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