GRANT OF PERSONAL HEARING OPPORTUNITY IN GST CASES

In general, while deciding a case either in tax matter or other matters, the quasi-judicial authorities are to follow the due procedure in law. A show cause notice will direct to reply within the period stipulated in the notice along with relied on documents to the Assessing Officer. The service of notice is essential. The GST Act provides the service of notice on GST portal and it will be sufficed for the Department. Many a tax payer may not able to access the GST portal for not having much knowledge about this. In such a case, it is settled law that the Department has to issue original show cause notice to the tax payer. Further the tax payer is also to give a reasonable opportunity of being heard. The date of hearing is to be communicated to the tax payer. If the said procedure is not complied with the order may be challenged before the High Court and made the same set aside.

In M/s MHJ METALTECHS PVT. LTD. Versus CENTRAL GOODS AND SERVICES TAX, DELHI SOUTH - 2025 (10) TMI 603 - SC Order, the appellant, before the High Court, contended that relied upon documents were not clear and they were illegible and hence there had been a violation or principles of Natural Justice. The High Court held that the relied upon documents are collected by the Department from various firms under investigation and whatever documents are available with the Department is what is collected from these firms and therefore, the Department cannot be expected to supply re-typed copies of relied upon documents, considering that these could be extremely bulky in nature. A mere plea by the petitioners that opportunity for three hearings was not given cannot be accepted when admittedly one of the hearings was attended by the petitioner. So long as a proper hearing had been granted by the Department, there could not be any allegation of violation of principles of Natural Justice. The Supreme Court was not satisfied and found that it was not a fit case to exercise discretionary jurisdiction under Article 136 of the Constitution of India. The Supreme Court dismissed the SLP with directions that the appellant may avail the alternate statutory remedies.

In M/s R.P. Industries Versus State Of U.P. And 2 Others - 2025 (9) TMI 461 - ALLAHABAD HIGH COURT, the petitioner purchased iron scraps from Rahul Trading Company, during December 2018. The goods in question were in transit towards the place of the petitioner along with the required documents. The Department, on 16.07.2020 issued a show cause notice to the petitioner under Section 74(1) of the Act on the ground that the supplier was not found at the place of the business. The show cause notice directed the petitioner to give reply to the show cause notice on or before 17.08.2020. But the Department fixed the personal hearing on 24.07.2020, i.e., before the last date fixed by the Department for submission of reply to the show cause notice. Without getting reply to the petitioner, the Department passed an ex-parte order on 28.08.2020 determining the tax and penalty. Against this order the petitioner filed an appeal before the First Appellate Authority, which was dismissed by the Appellate Authority on 06.09.2021. Against this order the petitioner filed the present writ petition before the High Court.

The petitioner contended before the High Court that once the notice issued is declared as void, then the whole proceedings go. The Department supported the orders of the Authorities below. The High Court heard the submissions of both the side and also perused the records. The High Court observed that the date of personal hearing was fixed much before the date for filing a reply to the notice by the appellant. The High Court held that the impugned order cannot be sustained in law. The High Court directed the Department to issue a fresh show cause notice to the petitioners. The petitioners are to file reply on the show cause notice issued on them. On considering the reply to the show cause notice, the Department is to pass order.

In Tvl. A.T. Sabuthomas contractor Represented by its Proprietor Sabu Thomas Versus The State Tax Officer, Nilgiris - 2025 (9) TMI 388 - MADRAS HIGH COURT, the Department issued a show cause notice to the petitioner on 22.05.2024. Further 3 reminder notices were also issued by the Department to the petitioner. The said notices were uploaded on the GST portal. No physical copy has been sent to the petitioner. Therefore, the petitioner did not file any reply to the said show cause notice. However, the Department passed an order confirming the demand in the show cause notice. No personal hearing has been given to the petitioner before passing the order.

The petitioner, being aggrieved against the above said order filed the present writ petition before the High Court. The petitioner contended that the impugned order is liable to be quashed since no personal hearing was granted to the petitioner. The petitioner is willing to pay 25% of the disputed tax amount to the Department. He prayed on payment of 25% of the disputed tax, the Court may direct the Department to give a personal hearing and decide the matter.

The Department contended that the Department has duly issued the show cause notice to the petitioner. The petitioner failed to avail the said opportunity. The Department admitted the no opportunity of personal hearing was provided to the petition before passing the impugned order.

The High Court heard the submissions of both sides and also perused the materials available on record. The High Court observed that the impugned order is liable to be set side since no personal hearing has been given to the petitioner and the show cause notice has been uploaded on the portal but the original show cause notice was not furnished to the petitioner.

The High Court further observed that sending show cause notice by uploading the same on the portal is the sufficient service. In this case, the Assessing Officer sent reminders to the petitioner, in spite of the fact that there was no response from the petitioner. The Officer ought to have explored the possibility of sending the notices by way of the modes prescribed under Section 169 of the Act, which are also the valid mode of service under the Act, otherwise it will not be an effective service, rather, it would only fulfilling the empty formalities. Merely passing an ex-parte order by fulfilling the empty formalities will not serve any useful purpose and the same will only pave way for multiplicity of litigations, not only wasting the time of the Officer concerned, but also the precious time of the Appellate Authority/Tribunal and the High Court as well.

Therefore, the High Court was of the view that there is a lack of opportunities being provided to serve the notices effectively to the petitioner. The petitioner is willing to deposit 25% of the disputed tax amount. The petitioner also submitted that with regard to the claim of Input tax credit, which is barred by limitation under Section 16(4) of the Act. The High Court, relying on its own previous order, set aside the order with regard to Input tax credit. For the other issues the High Court passed the following orders-

• The order dated 17.08.2024 is quashed and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 25% of the disputed tax amount to the department within 4 weeks from the date of receipt of the order. The setting aside of the impugned order will take effect from the date of payment of 25% of the disputed tax amount.
• The petitioner shall filed reply along with the required documents, if any, within a period of 3 weeks from the date of payment of amount.
• The Department shall consider the reply and issue a 14 days clear notice, by fixing the date of personal hearing to the petitioner and thereafter, pass appropriate orders on merits and in accordance with the provisions of the Act after hearing the petitioner.