Case image

Facts of the Case

Jose Paul, proprietor of Alpha Agencies, a registered dealer under the SGST and CGST Acts, filed GSTR-1, GSTR-3B, and the annual return in GSTR-9 with reconciliation statement in GSTR-9C for financial year 2017-18. A mismatch was noticed between GSTR-1 and GSTR-3B, and the department issued a show-cause notice, fixing a personal hearing for 07.03.2022. On that date, the assessing officer was on leave, and no fresh hearing date was communicated. Without any further opportunity, the impugned assessment order (Ext.P5) was passed under Section 73 of the GST Act. On the writ petition being listed, the Government Pleader was directed to obtain instructions and confirmed that no hearing had, in fact, been afforded to the petitioner.

Issues Involved

  1. Whether an assessment order passed under Section 73 of the GST Act, after the fixed personal hearing date lapsed without rescheduling due to the officer's leave, violates the mandatory hearing requirement.
  2. Whether such an order can be sustained where the department itself admits no opportunity of hearing was granted.

Petitioner's Arguments

  • The petitioner submitted that a hearing was fixed for 07.03.2022 as per notice, but no hearing actually took place since the officer was on leave that day, and no further date was communicated.
  • It was contended that the assessment order was passed thereafter without any opportunity of hearing, in breach of Section 73 of the GST Act.
  • The petitioner sought quashing of both the show-cause notice and the consequential order, with a further opportunity to be heard on merits.

Respondent's Arguments

  • On instructions, the learned Government Pleader candidly conceded that no opportunity of hearing was in fact given to the petitioner, as required under Section 73 of the GST Act.
  • No independent defence was pressed on the merits of the mismatch-based demand itself.

Court Order / Findings

  • Given the admitted position that no hearing was afforded, the Court held that the assessment order and the underlying show-cause notice could not be sustained and were liable to be set aside.
  • The writ petition was allowed, the impugned order (Ext.P5) and notice (Ext.P3) were set aside, and the petitioner was directed to appear before the assessing authority with all records for finalisation of a fresh assessment order in accordance with law.

Important Clarification

  • Where a personal hearing date fixed by the department lapses without the hearing actually taking place — for any reason, including the officer's own absence — and no further date is communicated, an assessment order passed thereafter is void for denial of the mandatory hearing under Section 73.
  • Once the department itself concedes non-grant of a hearing, courts will readily set aside the resultant order without probing the merits of the underlying tax demand.

Sections Involved

  • Section 73, CGST/SGST Act, 2017 – governs determination of tax not paid for reasons other than fraud, and mandates opportunity of hearing.
  • GSTR-1, GSTR-3B, GSTR-9 and GSTR-9C – the statutory return forms whose mismatch triggered the demand.

Decision – In Favour of

The decision is in favour of the assessee. The assessment order and show-cause notice were set aside for denial of a personal hearing, with the matter remanded for a fresh assessment after affording proper opportunity.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: WP(C) No. 29096/2023
CNR / Citation: Not available in judgment text
Coram: Hon'ble Mr. Justice Dinesh Kumar Singh
Date of Order: 18 September 2023

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.