Personal hearing is mandatory before passing the order

The Hon’ble Delhi High Court in the case of EXIDE INDUSTRIES LIMITED VERSUS ASSISTANT COMMISSIONER, CGST & ORS. - 2025 (4) TMI 1375 - DELHI HIGH COURTset asidethe demand order which was raised against Assessee for availing ineligible Input Tax Credit (“ITC”). However, the Assessee had not been afforded an opportunity of personal hearing though some attempts were made by the Assessee to approach the Department breaching violation of principles of natural justice. The Court directed fresh adjudication after imposing the cost on the Assessee for its own laxity in communication.

Facts:

M/s Exide Industries Limited (“the Petitioner”) was issued a Show Cause Notice (“SCN”) dated May 17, 2024, alleging availing of ineligible ITC. The Petitioner submitted a reply on June 10, 2024. Thereafter, a personal hearing was scheduled on November 20, 2024, which according to the Petitioner was never received. Another hearing was fixed for December 5, 2024, but the Petitioner sought an adjournment to December 19, 2024. Another, notice for personal hearing was issued on December 16, 2024 to the Petitioner but the notice was received on the same day of the hearing.

Thereafter, the Petitioner’s representatives visited the Respondent’s office, however, an Order on February 3, 2025 (“the Impugned Order”) along with Form GST DRC-07 on February 04, 2025, without granting any further opportunity to be heard.

Hence, aggrieved by the Impugned Order, the Petitioner filed the present writ petition.

Issue:

Whether personal hearing is mandatory before passing the order?

Held:

The Hon’ble Delhi High Court in EXIDE INDUSTRIES LIMITED VERSUS ASSISTANT COMMISSIONER, CGST & ORS. - 2025 (4) TMI 1375 - DELHI HIGH COURTheld as under:

• Observed that, the Petitioner was issued repeated personal hearing notices. Hence, it is clear that there has been a laxity by the Petitioner. However, the Respondent also could have put the Petitioner to terms and not have passed a detailed order raising a substantial demand running into more than Rs. 12 crores including the recovery of ineligible ITC and penalty of Rs. 6,34,61,579/-.
• Noted that, the fact that the Petitioner has not been afforded a hearing though some attempts were made by the Petitioner to thereafter approach the Respondent's office, there would be breach of natural justice.
• Opined that, since repeated adjournments have been sought by the Petitioner, the period of limitation for passing the Order-in-Original in terms of Section 75(3) of the CGST Act, does not apply in the present case.
• Held that, the Impugned Order was set aside, with imposing the cost of Rs. 1 Lakh to contribute to the Delhi High Court Bar Association, and the Petitioner was to be given a fresh opportunity of hearing with a minimum of 5 working days' notice, and no adjournments were to be entertained.

Our Comments:

Section 75(4) of the CGST Act governs “General provisions relating to determination of tax”. Further, Section 75(4) of the CGST Act states that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

The Hon’ble Delhi High Court inPOWER2SME PVT. LTD. VERSUS COMMISSIONER OF DELHI GST DEPARTMENT OF TRADE AND TAXES AND ANR. - 2025 (5) TMI 255 - DELHI HIGH COURT set aside the demand order wherein demand was raised against Assessee, but no opportunity of hearing was provided to Assessee and Assessee was to be permitted to file a supplementary reply to the SCN.

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