No provision under GST for reserving judgment and delivering the same later

The Hon’ble Allahabad High Court in M/S SUN GLASS WORKS PRIVATE LIMITED VERSUS THE STATE OF U.P. AND 2 OTHERS - 2025 (6) TMI 100 - ALLAHABAD HIGH COURT held that an order passed without providing a copy of the survey report or affording opportunity of hearing, and without notifying the date of pronouncement, is unsustainable in law and liable to be set aside.

Facts:

M/s Sun Glass Works Pvt. Ltd. (“the Petitioner”) is a private limited company engaged in the manufacture and sale of glass bottles. During June 2021, the Petitioner purchased various chemicals from registered dealers against valid tax invoices for use in its manufacturing process.

The State of Uttar Pradesh (“the Respondent”) issued a show cause notice dated February 17, 2022 under Section 74(1) of the CGST Act alleging that input tax credit had been availed by fraud or misstatement. In response, the Petitioner submitted a detailed reply along with supporting documents including tax invoices, bank statements, and Form GSTR-2A.

Despite the above, the Respondent passed an order dated May 10, 2022 demanding tax and penalty without furnishing a copy of the alleged survey report or granting an opportunity of hearing. Aggrieved, the Petitioner filed an appeal, which was dismissed by the Appellate Authority through the impugned order dated September 25, 2024.

The Petitioner contended that the judgment was reserved on September 18, 2024 without any notice of the pronouncement date, and was later delivered on September 25, 2024. It was submitted that there is no provision under the GST Act permitting such reservation and delayed pronouncement of orders without due notice. The Petitioner relied upon the decision in M/S WONDER ENTERPRISES VERSUS ADDITIONAL COMMISSIONER GRADE-2 AND ANOTHER - 2024 (9) TMI 1749 - ALLAHABAD HIGH COURT.

Issue:

Whether the appellate order passed without sharing the survey report and without notifying the petitioner about the date of pronouncement after reserving judgment valid ?

Held:

The Hon’ble Allahabad High Court in M/S SUN GLASS WORKS PRIVATE LIMITED VERSUS THE STATE OF U.P. AND 2 OTHERS - 2025 (6) TMI 100 - ALLAHABAD HIGH COURTheld as under:

• Observed that, the impugned order dated September 25, 2024 was passed without furnishing the Petitioner a copy of the survey report or affording opportunity of hearing, which violated the principles of natural justice.
• Noted that, the date originally fixed for hearing was September 18, 2024, when the matter was reserved for judgment. However, the judgment was later delivered on September 25, 2024 without issuing any notice to the Petitioner regarding the new date.
• Further noted that, the personal affidavit filed by the appellate authority failed to disclose any provision or notification permitting such a course of action under the CGST Act.
• Held that, the issue is squarely covered by M/s Wonder Enterprises (supra) and the impugned appellate order could not be sustained in law.
• Accordingly, the writ petition was allowed, the appellate order dated September 25, 2024 was quashed, and the matter was remanded to the appellate authority for fresh adjudication after granting due opportunity of hearing to all stakeholders, preferably within three months.

Our Comments:

This decision reinforces the mandatory requirement of following due process and natural justice before passing orders under the GST law. Section 75(4) of the CGST Act, 2017 provides that an opportunity of hearing must be granted wherever adverse decision is contemplated. Additionally, Section 75(1) mandates adherence to principles of natural justice in adjudication proceedings under Section 74.

The High Court’s reliance on the earlier precedent in M/s Wonder Enterprises reiterates that any deviation from fair procedure — including failure to furnish adverse materials (like survey reports) or passing orders without notice post-reservation — renders the order legally unsustainable.

This judgment underscores the importance of procedural rigour, especially when a taxpayer's substantive rights (like ITC entitlement) are being curtailed. In the GST context, courts continue to insist on robust adherence to statutory safeguards and fair hearing norms before imposing tax demands.

Relevant Provision:

Section 75 – General provisions relating to determination of tax

“(3) Where any order is required to be issued in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction.

(4) 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.”

 (Author can be reached at [email protected])