Facts of the Case

The petitioner's firm, registered under GST, was issued a show-cause notice under Section 61 of the GST Act on 08.09.2020, followed by an order under Section 74(9) dated 14.07.2021 confirming a tax demand. The petitioner, citing an incurable illness supported by a medical certificate, sought adjournment during the proceedings, and his subsequent appeal against the order came to be dismissed as barred by limitation. Before the Allahabad High Court, Lucknow Bench, the petitioner contended that although he had sought and been granted an adjournment on account of illness, no personal hearing was ever thereafter scheduled, and the order under Section 74(9) was passed without a hearing.

Issues Involved

  1. Whether an order passed under Section 74(9) of the GST Act without granting the mandatory opportunity of personal hearing under Section 75(4) is sustainable.

Petitioner's Arguments

  • Although an adjournment was granted on account of illness, no date, time or venue for personal hearing was subsequently fixed, and the demand order was passed straightaway.
  • Relied on the Court's own precedent in M/s Santosh Traders vs State of U.P. (Writ Tax No.174 of 2023, decided 28.08.2023), where an identically defective order was quashed and remanded on the same ground.

Respondent's Arguments

  • Counsel for the respondent pointed out that respondent no.1 had been improperly described in the petition, a procedural objection the Court accepted but held would not affect the outcome on merits.

Court Order-Findings

  • The Court called for the original records to verify whether an opportunity of hearing had in fact been granted.
  • On perusal, it was found that the reminder notice dated 10.02.2021 recorded the words “NA” against the date, time and venue of personal hearing, and the impugned order itself did not reflect that any hearing was granted.
  • Following M/s Santosh Traders vs State of U.P., the Court held that Section 75(4) mandates an opportunity of hearing, which was admittedly not afforded.
  • The order passed under Section 74 was quashed; the consequential order dated 26.12.2022 also lost its efficacy and was quashed.
  • The matter was remanded, directing the authority to pass a fresh order after granting an opportunity of hearing in accordance with law.
  • The writ petition was allowed in these terms.

Important Clarification

  • Section 75(4) of the GST Act makes it mandatory for the adjudicating authority to grant an opportunity of personal hearing before passing an adverse order under Section 74; a hearing notice that leaves the date, time and venue columns marked “NA” amounts to no hearing at all, and the resulting order is liable to be quashed and remanded, irrespective of whether a subsequent appeal against it was dismissed as time-barred.

Sections Involved

  • Section 74(9), CGST Act, 2017 — determination of tax in cases involving fraud or suppression.
  • Section 75(4), CGST Act, 2017 — mandates an opportunity of hearing before an adverse order.
  • Section 61, CGST Act, 2017 — scrutiny of returns, under which the original notice was issued.

Decision-In Favour of

Assessee — the demand order was quashed and the matter remanded for fresh adjudication with a proper opportunity of hearing.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Allahabad, Lucknow Bench
  • Case No.: Writ Tax No.143 of 2023
  • CNR: Not available
  • Coram: Hon'ble Mr Justice Pankaj Bhatia
  • Decision Date: 18-10-2023

Link to Download the Order

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