Facts of the Case

The petitioner, Arati Behera, sought to quash an order dated 24.05.2023 passed under Section 73 of the Odisha GST Act, 2017, following a notice in Form GST DRC-01 dated 31.03.2023 for the tax period July 2017 to March 2018. On 29.04.2023, the petitioner had filed an application under Rule 142(4) of the OGST Rules seeking 30 days' time to submit a reply. Notably, in that time-extension application, the petitioner had ticked "No" against the column for "option for personal hearing." Without waiting for the requested 30 days to expire, the assessing authority passed the impugned order on 24.05.2023, before the 30-day period sought would have run out.

Issues Involved

  1. Whether the impugned order under Section 73 of the OGST Act was sustainable where it was passed before expiry of the 30-day period the petitioner had sought for filing a reply, and where the petitioner's "No" tick-mark on personal hearing was made only in the context of that time-extension application.

Petitioner's Arguments

  • Section 75(4) of the OGST Act mandates a hearing opportunity whenever requested in writing; the petitioner had sought 30 days under Rule 142(4) of the OGST Rules for submitting a reply, but the impugned order was passed before that period expired.
  • The statute requires that at least three opportunities be given to an assessee to furnish a reply, which was not complied with here.

Respondent's Arguments

  • In Form GSTDRC-06, at Serial No.7, the petitioner had ticked "No" against "option for personal hearing," showing the petitioner did not want a personal hearing, and the order was therefore well justified and did not require interference.

Court Order / Findings

  • The "No" tick-mark against personal hearing in the time-extension application (Annexure-3) was made in the context of that specific request for time, not as a general waiver applicable to the eventual adjudication — once the petitioner sought 30 days to file a reply, the authority ought to have acted on that request rather than treat the hearing waiver as blanket.
  • The statute requires at least three opportunities to be given to the assessee, which was not complied with; moreover, the order under Section 73 was passed on 24.05.2023, before expiry of the 30-day period sought via the application dated 29.04.2023.
  • Following its own precedent in Serajuddin and Co. v. Union of India, 2020 (34) G.S.T.L. 24 (Ori), where similar haste in disregarding a pending time/hearing request was held to violate statutory requirements, the Court found the opposite parties had shown haste in passing the order without giving the petitioner a genuine opportunity of hearing consistent with the statute.
  • The impugned order dated 24.05.2023 was quashed, and the matter remitted to the adjudicating authority to pass a fresh order under Section 73 after affording the petitioner an opportunity of hearing.
  • The writ petition was disposed of accordingly.

Important Clarification

A taxpayer's tick-mark declining personal hearing on a Rule 142(4) time-extension application cannot be treated as a general waiver of the hearing right for the eventual adjudication; once a request for time to reply is pending, the assessing authority must await its expiry (or otherwise dispose of it) before passing an adverse order, and the statutory requirement of multiple hearing opportunities under Section 73/75 of the OGST/CGST Act cannot be short-circuited by acting in haste.

Sections Involved

  • Section 73, Odisha GST Act, 2017 – determination of tax not paid/short paid other than by reason of fraud.
  • Section 75(4), Odisha GST Act, 2017 – mandates a hearing opportunity on written request or where an adverse decision is contemplated.
  • Rule 142(4), OGST Rules, 2017 – governs an assessee's request for time to reply to a show cause notice/DRC-01.

Decision – In Favour of

In favour of the Assessee — the assessment order was quashed for haste and denial of a genuine hearing opportunity, with the matter remitted for fresh adjudication after hearing.

Case Details

High Court of Orissa at Cuttack; W.P.(C) No.23003 of 2023; Coram: Hon'ble Dr. Justice B.R. Sarangi and Hon'ble Mr. Justice Murahari Sri Raman; Order dated 27.07.2023; CNR not indicated on the order copy.

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