Facts of the Case

The petitioner, M/s. Nilamadhaba Enterprises, a registered dealer under the Odisha Goods and Services Tax Act, 2017 (OGST Act), approached the High Court of Orissa at Cuttack challenging an assessment order dated 21.06.2023 passed by the State Tax Officer, CT & GST Circle, Keonjhar, under Section 73 of the OGST Act. The petitioner's grievance was that the impugned order was passed ex-parte, without granting any opportunity of personal hearing, in breach of natural justice. Reliance was placed on an earlier decision of the same High Court in Khani Khyatigrasta Gramya Committee v. The Commissioner of Commercial Tax & GST and Another (W.P.(C) No.27946 of 2023, disposed of on 09.11.2023), it being contended that the facts of the present case were fully covered by that ruling. The matter was heard through hybrid mode by a Division Bench comprising the Acting Chief Justice and Justice Murahari Sri Raman. No amount or tax period figures are set out in the order itself; the challenge was confined entirely to the procedural infirmity of the assessment having been finalised without a hearing.

Issues Involved

  1. Whether an assessment order passed under Section 73 of the OGST Act without affording the petitioner an opportunity of personal hearing can be sustained in law.
  2. Whether the matter warrants remand to the adjudicating authority for a fresh decision after complying with the principles of natural justice.

Petitioner's Arguments

  • The State Tax Officer passed the order dated 21.06.2023 without giving the petitioner any opportunity of hearing, rendering it an ex-parte order.
  • Denial of personal hearing before confirming a tax demand under Section 73 violates the principles of natural justice.
  • The case is squarely covered by the ratio in Khani Khyatigrasta Gramya Committee, where an identically defective order was quashed by the same Court.

Respondent's Arguments

  • The Standing Counsel for the CT & GST Department fairly conceded that the petitioner had not been given an opportunity of hearing before the order was passed.
  • Since the procedural lapse was undisputed, the Department itself submitted that the matter ought to be remanded to the concerned authority so that a hearing could be afforded in consonance with law.

Court Order/Findings

  • The Court held that an order passed under Section 73 of the OGST Act without granting an opportunity of personal hearing cannot be sustained in the eye of law, irrespective of its merits.
  • Without expressing any opinion on the merits of the case, the Court quashed the order dated 21.06.2023.
  • The matter was remitted to the very same authority to rehear it afresh in accordance with law, after giving the petitioner an opportunity of hearing, taking into account the ratio in Khani Khyatigrasta Gramya Committee.

Important Clarification

Even where a taxpayer has otherwise not adequately engaged with a show cause notice, the adjudicating authority under Section 73 of the GST law cannot bypass the statutory requirement of personal hearing before confirming a demand. Non-grant of hearing is, by itself, sufficient ground for a writ court to quash the order and secure a remand, without examining the underlying merits of the tax demand at all.

Sections Involved

  • Section 73, OGST Act, 2017 — governs determination of tax not paid or short paid, or input tax credit wrongly availed, in cases not involving fraud or wilful misstatement, and requires a fair opportunity of hearing before confirmation of demand.

Decision – In Favour of

The decision is procedurally in favour of the Assessee. The Court quashed the impugned assessment order solely on the ground of denial of personal hearing and remanded the matter for fresh adjudication, without recording any finding on the merits of the tax demand itself. The petitioner has therefore secured a fresh opportunity to be heard, but the ultimate outcome on tax liability remains open before the State Tax Officer.

Related Case Laws

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

Case Details

  • Court: High Court of Orissa at Cuttack
  • Case No.: W.P.(C) No.38598 of 2023
  • CNR: Not available
  • Coram: Acting Chief Justice Dr. B.R. Sarangi and Justice Murahari Sri Raman
  • Decision Date: 06.12.2023
  • Disposal Nature: Order quashed and remanded

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