Facts of the Case

Gyana Ranjan Senapati challenged an order dated 08.07.2022 passed by the Additional CT & GST Officer, Bhubaneswar-I Circle, under Section 74 of the OGST Act, 2017. The petitioner's Senior Counsel pointed out that the order was passed without any show cause notice being issued for a hearing, despite the petitioner having filed replies on 24.01.2020, 08.02.2021 and 20.01.2022 in response to an earlier notice dated 27.12.2019 and an intimation dated 01.02.2021. The Standing Counsel for the Department was unable to dispute this sequence of facts.

Issues Involved

  1. Whether an adjudication order under Section 74 of the OGST Act passed without issuing a show cause notice for hearing, despite the assessee's repeated replies over an extended period, can be sustained.

Petitioner's Arguments

  • The order dated 08.07.2022 was passed under Section 74 without any show cause notice being issued affording the petitioner a hearing, notwithstanding replies filed on three separate occasions between January 2020 and January 2022.

Respondent's Arguments

  • The Standing Counsel for the Department was unable to dispute the factual position that no show cause notice for hearing had been issued despite the petitioner's earlier replies.

Court Order / Findings

  • Since the Department could not dispute that the order was passed without a hearing notice despite the petitioner's multiple replies over more than two years, the order could not stand.
  • An assessment order under Section 74 of the GST Act passed without issuing a proper show cause notice for hearing, notwithstanding that the assessee has actively engaged with the department by filing replies to earlier notices and intimations, is liable to be set aside for want of a genuine opportunity of hearing.
  • The order dated 08.07.2022 was set aside, and the petitioner was directed to appear before the Additional CT and GST Officer on a fixed date for a hearing, with a consequential order to be passed within three months in accordance with law, and further liberty to the petitioner to seek appropriate remedy if aggrieved by the fresh decision.

Important Clarification

  • Filing replies to earlier notices or intimations over an extended period does not substitute for a proper show cause notice affording a specific hearing opportunity before a Section 74 adjudication order; the absence of such notice, even where the assessee has otherwise engaged with the department, independently vitiates the order.

Sections Involved

  • Section 74, OGST Act, 2017 - determination of tax by reason of fraud or wilful misstatement, requiring notice and opportunity of hearing.

Decision – In Favour of

The writ petition was disposed of in favour of the Assessee, with the impugned order set aside and a fresh hearing directed.

Case Details

Court: High Court of Orissa at Cuttack
Case No.: W.P.(C) No.35664 of 2022
Coram: Justice Dr. B.R. Sarangi and Justice Murahari Sri Raman
Date of Order: 22.08.2023

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