Facts of the Case

M/S Star Traders, through its proprietor Shri Irshad Ali Siddiqui, challenged an order dated 08.04.2024 passed under Section 73 of the CGST/UPGST Act, 2017 raising a tax demand, along with the appellate order dated 20.08.2025 which dismissed its first appeal as barred by limitation. The petitioner's grievance was that the show-cause notice preceding the Section 73 order had fixed the date for personal hearing earlier than the date fixed for filing a reply, effectively denying it a meaningful opportunity to be heard before the demand was confirmed. The writ petition was filed before the Allahabad High Court (Lucknow Bench) seeking quashing of both the original demand and the appellate rejection, and a direction for fresh adjudication after proper compliance with the hearing requirement under the Act.

Issues Involved

  1. Whether a show-cause notice under Section 73 that schedules the personal hearing before the reply due date amounts to denial of a fair opportunity of hearing.
  2. Whether such a procedural defect is, by itself, sufficient to vitiate the resulting demand order and the appellate order rejecting the appeal as time-barred.

Petitioner's Arguments

  • No genuine opportunity of hearing was granted before the Section 73 order was passed.
  • The show-cause notice fixed the personal hearing date prior to the date fixed for filing the reply, making it impossible to be meaningfully heard on the reply's contents.
  • The identical defect had already been examined and accepted by the same High Court in Writ Tax No. 303 of 2024, Mahaveer Trading Company vs. Deputy Commissioner, State Tax and Another, decided on 04.03.2024.
  • Both the original order and the appellate order dismissing the appeal on limitation deserved to be set aside on this sole procedural ground.

Respondent's Arguments

  • Learned Standing Counsel, on instructions, did not dispute the factual position and confirmed that the show-cause notice had indeed mentioned an earlier date for personal hearing than the date fixed for filing the reply.
  • No independent justification was offered for treating the sequencing defect as immaterial.

Court Order / Findings

  • The Court noted that the Standing Counsel's own instructions confirmed the very defect alleged by the petitioner — the hearing date preceded the reply date.
  • Following its earlier ruling in Mahaveer Trading Company vs. Deputy Commissioner, State Tax, the Court held that such sequencing renders the opportunity of hearing illusory and vitiates the Section 73 order.
  • On this sole ground, the writ petition was allowed, and both the original order dated 08.04.2024 and the appellate order dated 20.08.2025 were quashed.
  • The matter was remanded to the assessing authority to pass a fresh order after granting the petitioner a genuine opportunity of hearing.

Important Clarification

  • A show-cause notice under Section 73 must fix the personal hearing date after, not before, the date allowed for filing the reply, else the hearing becomes an empty formality.
  • Such a defect goes to the root of natural justice and can be raised even where the first appeal itself was rejected as time-barred, since the underlying order suffers from a fundamental infirmity.
  • Assessees facing similarly sequenced notices can rely on binding coordinate-bench precedent to seek quashing and remand rather than contesting limitation alone.

Sections Involved

  • Section 73, CGST Act, 2017 — determination of tax not paid or short paid for reasons other than fraud, requiring a proper show-cause and hearing process.
  • Section 75(4), CGST Act, 2017 — mandates an opportunity of personal hearing before an adverse decision is passed against the taxable person.
  • Section 107, CGST Act, 2017 — governs the limitation period for filing an appeal against an adjudication order.

Decision – In Favour of

The decision is in favour of the assessee. Both the Section 73 demand order and the appellate order rejecting the appeal as time-barred were quashed, with the matter remanded for fresh adjudication after a proper hearing.

Case Details

Court: High Court of Judicature at Allahabad, Lucknow Bench
Case No.: Writ Tax No. 892 of 2025
Coram: Hon'ble Justice Pankaj Bhatia
Date of Order: September 9, 2025

Link to Download the Order

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