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 the corresponding FORM GST DRC-07, on the ground that the proceedings were conducted in violation of the principles of natural justice.

The petitioner also sought quashing of the show cause notice issued in FORM GST DRC-01. The principal grievance was that although a date for filing a reply to the show cause notice had been prescribed, the adjudicating authority fixed the personal hearing fourteen days before the last date available for filing the reply. Consequently, the petitioner was deprived of a meaningful opportunity to submit its defence and supporting documents before the hearing took place.

The petitioner therefore requested the High Court to quash the assessment order and remand the matter for fresh adjudication after granting an effective opportunity of hearing.

 

Issues Involved

  1. Whether an assessment order passed under Section 73 of the CGST Act, 2017 is sustainable when the personal hearing is scheduled before the expiry of the time granted for filing a reply to the show cause notice.
  2. Whether fixing a personal hearing prior to the reply deadline violates the principles of natural justice.
  3. Whether such procedural irregularity warrants setting aside the assessment order and remanding the matter for fresh adjudication.

 

Petitioner's Arguments

  • The petitioner submitted that the adjudicating authority adopted an illegal procedure by fixing the personal hearing before the expiry of the period granted for filing the reply.
  • Since the hearing was conducted before the petitioner could submit its complete response and supporting documents, the opportunity of hearing became merely illusory.
  • The petitioner argued that this procedure violated the mandatory principles of natural justice and deprived it of an effective 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 & Another (Writ Petition (M/B) No.166 of 2026, decided on 17.03.2026), wherein similar proceedings were set aside on identical grounds.

 

Respondent's Arguments

The State fairly conceded before the High Court that:

  • The personal hearing had indeed been fixed fourteen days before the last date prescribed for filing the reply.
  • Consequently, the opportunity of hearing provided to the petitioner was merely formal and did not satisfy the procedure prescribed under law.
  • The Revenue accepted that such hearing could not be treated as a valid opportunity of personal hearing.

 

Court Order / Findings

The Uttarakhand High Court held that:

  • A personal hearing conducted before expiry of the period allowed for filing the reply cannot be regarded as an effective hearing.
  • Such a hearing violates the principles of natural justice, as the taxpayer is denied a meaningful opportunity to present its defence.
  • Since the statutory procedure was not properly followed, the assessment order passed under Section 73 of the GST Act could not be sustained.

Accordingly, the Court:

  • Quashed the Assessment Order passed under Section 73.
  • Remitted the matter back to the Adjudicating Officer.
  • Directed the adjudicating authority to proceed afresh from the stage of the show cause notice.
  • Directed that a fresh date of personal hearing be fixed after providing the petitioner an adequate opportunity to file its reply and submissions.

The writ petition was accordingly disposed of.

 

Important Clarification

This judgment reiterates that:

  • A personal hearing must be real, meaningful and effective, and not merely a procedural formality.
  • Fixing the hearing before the expiry of the reply period defeats the very purpose of granting an opportunity to defend.
  • Any assessment order passed after following such defective procedure is liable to be quashed.
  • Authorities conducting proceedings under Section 73 of the CGST Act, 2017 must strictly adhere to the requirements of natural justice before finalising assessments.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017
  • Principles of Natural Justice
  • FORM GST DRC-01
  • FORM GST DRC-07

Link to download the order-https://mytaxexpert.co.in/uploads/1783925413_401compressed.pdf

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