Facts of the Case

M/S Kailash Traders, through its proprietor Sahil Singh, stated it had closed its business in 2019 and got its GST registration under the U.P. GST Act, 2017 cancelled in 2021, but a show-cause notice under Section 73 was issued on 22.05.2024, of which the petitioner claims to have had no knowledge since it was no longer monitoring the portal following cancellation. A final assessment order dated 17.08.2024 under Section 73 was passed without service of notice and without any personal hearing, followed by a demand order dated 01.02.2025, both challenged before the Allahabad High Court.

Issues Involved

  1. Whether an assessment order passed without service of the show-cause notice and without any opportunity of personal hearing is sustainable where the department itself explains the omission was due to time pressure.
  2. What consequence follows for a consequential demand order founded on such an assessment.

Petitioner's Arguments

  • Had closed business in 2019 and got GST registration cancelled in 2021, and never came to know of the Section 73 notice dated 22.05.2024.
  • The notice was neither served nor followed by any personal hearing before the final assessment was made; both the assessment order and consequential demand deserved to be quashed for want of any hearing.

Respondent's Arguments

  • In the counter affidavit, did not deny the petitioner's cancellation of registration in 2021, and candidly stated in paragraph 11 that "since the case was about to be time barred, due to lack of time, the date of personal hearing was not given and an ex-parte order was passed under Section 73."

Court Order / Findings

  • Expressing that it was "surprised and shocked" at this response, the Court held that passing a final assessment order without an opportunity of hearing, admittedly because the officer was racing against the limitation clock, was "nothing but admission of a blatant abuse of power by the Tax authorities."
  • The impugned assessment order dated 17.08.2024 was quashed along with the consequential demand order dated 01.02.2025; the writ petition was allowed.

Important Clarification

  • An officer's own admission that a hearing was skipped merely to beat the limitation deadline is treated by courts not as a mitigating factor but as an aggravating one.
  • Such conduct amounts to a blatant abuse of power that renders the entire assessment — and any consequential demand — void, independent of whether the assessee had actually received the notice.

Sections Involved

  • Section 73, CGST/U.P. GST Act, 2017 — determination of tax not paid, non-fraud, requiring a proper notice and hearing before an order under sub-section (9).
  • Section 75(4), CGST Act, 2017 — mandates a personal hearing before an adverse order.
  • Section 29, CGST Act, 2017 — cancellation of registration, background to the petitioner's 2021 cancellation.

Decision – In Favour of

The decision is in favour of the assessee. Both the assessment order and the consequential demand order were quashed.

Case Details

Court: High Court of Judicature at Allahabad, Lucknow Bench
Case No.: Writ Tax No. 403 of 2025; Neutral Citation 2025:AHC-LKO:42628-DB
Coram: Hon'ble Justice Rajan Roy and Hon'ble Justice Manish Kumar
Date of Order: 24.7.2025

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