Facts of the Case

The petitioner, M/S Jai Vindhya Udyog, through its partner Niraj Kumar Agarwal, challenged an order dated 02.09.2023 dismissing its appeal under Section 107 of the GST Act as time-barred, and the underlying order dated 29.08.2022 passed by respondent no.3 creating a demand under Section 73(9) of the GST Act. The petitioner, a bona fide firm, had claimed input tax credit; a scrutiny notice dated 06.08.2021 flagged discrepancies in its returns after scrutiny, followed by a show cause notice under Section 73 on 28.06.2022 fixing 27.07.2022 as the date for reply, and a reminder on 22.08.2022. As the petitioner did not file a reply, the demand order was passed on 29.08.2022 without a personal hearing. The matter was heard on the basis of records produced by learned Standing Counsel pursuant to an earlier order of the Court dated 03.10.2023, and the petitioner thereafter pressed primarily the challenge to the original order rather than the appellate dismissal.

Issues Involved

  1. Whether an order under Section 73(9) of the GST Act passed without granting a personal hearing, as mandated by Section 75(4), can be sustained.
  2. Whether the subsequent appellate dismissal on limitation grounds should also fall once the original order is found void for want of hearing.
  3. Whether marking the hearing date, time and venue as "NA" in the show cause notice and reminder amounts to denial of the statutory opportunity of hearing.

Petitioner's Arguments

  • The petitioner is a bona fide firm that claimed input tax credit in accordance with law.
  • Emphasis was laid on challenging the original order under Section 73(9), which was passed without providing any opportunity of personal hearing, contrary to Section 75(4) of the GST Act.
  • Even though both the original order and the appellate order were under challenge, the primary grievance was the illegality of the original demand order for want of a hearing.

Respondent's Arguments

  • Standing Counsel, on instructions and after producing the departmental records, conceded that no personal hearing was granted, a fact also evident from the impugned order itself.
  • No substantive defence was offered to the allegation of breach of Section 75(4), and the records themselves confirmed that the hearing columns were marked "NA".

Court Order/Findings

  • The notice under Section 73 and the reminder both left the date, time and venue of personal hearing blank, marked "NA," confirming that no hearing was afforded to the petitioner.
  • Section 75(4) of the GST Act mandates an opportunity of personal hearing before an adverse order is passed, and compliance with this provision is mandatory — following this Court's earlier ruling in Party Time Hospitality Prop. Smt. Punita Gupta Lko. v. State of U.P. (Writ Tax No.176 of 2023, decided 28.08.2023), which itself considered the Court's earlier decisions on the point.
  • Since the original order dated 29.08.2022 was contrary to the mandate of Section 75(4) and violative of the principles of natural justice, it was liable to be quashed and was accordingly quashed.
  • As the original order was quashed, the consequent appellate order dated 02.09.2023 dismissing the appeal on limitation was also quashed; the matter was remanded to respondent no.3 to pass fresh orders after granting a hearing and permitting the petitioner to file a reply to the show cause notice, in accordance with law.

Important Clarification

  • An adjudication order under Section 73(9) of the GST Act passed without a genuine opportunity of personal hearing violates the mandatory requirement of Section 75(4) and is liable to be quashed, irrespective of whether the assessee replied to the show cause notice.
  • Marking the hearing date, time and venue as "NA" in the notice and reminder is treated by courts as clear, self-evident proof that no hearing was actually offered, without the assessee needing to prove prejudice separately.
  • Once the original order is quashed on this ground, a limitation-based dismissal of the appeal against it also falls away, since there is no valid order left to sustain the appellate dismissal.
  • Courts remand such matters for fresh adjudication after a proper hearing, rather than deciding the tax demand on merits themselves.

Sections Involved

  • Section 73(9), GST Act, 2017 — determination of tax not paid/short paid for reasons other than fraud.
  • Section 75(4), GST Act, 2017 — mandates an opportunity of personal hearing before any adverse decision.
  • Section 107, GST Act, 2017 — appeal to the appellate authority against orders passed under the Act.

Decision – In Favour of

In favour of the Assessee — both the demand order and the appellate dismissal were quashed and the matter remanded for a fresh hearing.

Related Case Laws

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

Case Details

  • Court: Allahabad High Court, Lucknow Bench
  • Case No.: WRIT TAX No. 190 of 2023
  • CNR: 2023:AHC-LKO:64847
  • Coram: Hon'ble Justice Pankaj Bhatia
  • Decision Date: 9 October 2023
  • Disposal Nature: Allowed; assessment order under Section 73(9) and appellate order quashed, remanded for opportunity of hearing under Section 75(4)

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