Facts of the Case

M/S Ramji Kirana Store, through its proprietor, filed Writ Tax No.191 of 2023 before the High Court of Judicature at Allahabad (Lucknow Bench), challenging an assessment order dated 20.02.2023 passed under Section 73 of the GST Act, and a subsequent order dated 31.07.2023 dismissing the petitioner's delay condonation application in appeal. The petitioner, a registered GST dealer, had been issued a notice under Section 73 read with Rule 142(5) of the GST Rules, followed by a reminder notice dated 02.10.2022 fixing 05.12.2022 as the reply date; however, the columns for date, time and venue of personal hearing in that reminder notice were marked 'NA'. No hearing was granted before the assessment order was passed. The petitioner filed a delayed appeal, depositing 10% of the disputed amount, but the delay condonation application was dismissed on 31.07.2023 without any recorded application of mind, as confirmed by the department's own records produced pursuant to the Court's order dated 03.10.2023.

Issues Involved

  1. Whether an assessment order passed under Section 73 of the GST Act without granting a personal hearing, where the reminder notice marked the hearing particulars as 'NA', violates the mandatory requirement of Section 75(4) of the GST Act.
  2. Whether the appellate authority's dismissal of the delay condonation application, without any recorded application of mind, could be sustained.

Petitioner's Arguments

  • Section 75(4) of the GST Act mandates that a hearing be granted before an adverse order is passed; this was admittedly not done, as the reminder notice itself recorded 'NA' against the date, time and venue of hearing.
  • The order was consequently in clear violation of the principles of natural justice and liable to be quashed.
  • The appellate order rejecting the delay condonation application was passed without consideration or application of mind, and reliance was placed on Kajal Dutta v. Assistant Commissioner of State Tax, M.A.T. No.1924 of 2022, for the proposition that courts under Article 226 can examine and grant relief even where an appeal is filed beyond the condonable period.

Respondent's Arguments

  • The State was directed by the Court to produce the original records to verify whether any hearing had in fact been granted at the assessment or appellate stage.
  • No specific justification was placed on record by the State to controvert the absence of a fixed hearing date, time or venue in the reminder notice.

Court Order/Findings

  • On perusal of the original records produced by the State, the Court found that no hearing had in fact been granted to the petitioner despite the mandatory requirement.
  • The original assessment order suffers from the vice of not following the mandatory provisions under Section 75(4) of the GST Act and is contrary to the principles of natural justice, and the appellate order too showed no application of mind to the delay condonation application.
  • Both the assessment order dated 20.02.2023 and the appellate order dated 31.07.2023 were quashed, and the matter was remanded to the assessing authority to pass a fresh order after granting the petitioner an opportunity of hearing.

Important Clarification

Section 75(4) of the GST Act casts a mandatory obligation on the department to grant a personal hearing before passing an adverse assessment order; merely issuing a notice with hearing columns marked 'NA' does not satisfy this requirement, and an order passed in such circumstances is liable to be set aside for violation of natural justice, irrespective of the merits of the underlying tax demand.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017 – determination of tax not paid or short paid for reasons other than fraud.
  • Section 75(4) of the Central Goods and Services Tax Act, 2017 – mandatory opportunity of personal hearing before an adverse order.
  • Rule 142(5) of the CGST Rules, 2017 and Section 107 of the CGST Act, 2017 – appellate remedy and condonation of delay.

Decision – In Favour of

The decision is squarely in favour of the Assessee. Both the assessment order and the appellate rejection were quashed on natural justice grounds, and the matter was remanded for a fresh 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
  • Case No.: Writ Tax No.191 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Justice Pankaj Bhatia
  • Decision Date: 11 October 2023
  • Disposal Nature: Writ petition allowed, orders quashed and remanded

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