GST Demand Order Quashed: Procedural Fairness Prevails, Natural Justice Principles Upheld in Section 74 Challenge

HC allowed petitioner's challenge to GST demand order under Section 74, finding violation of natural justice principles. The court quashed the original demand order and subsequent limitation order, mandating respondent provide proper hearing opportunity and allow reply to show-cause notice before passing any fresh order.

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Issues involved:
1. Challenge to order dismissing appeal under Section 107 of GST Act as beyond limitation.
2. Challenge to order creating demand under Section 74 of GST Act without providing opportunity of hearing.

Issue 1: Challenge to order dismissing appeal under Section 107 of GST Act as beyond limitation:
The petitioner challenged the order dated 29.03.2023 dismissing the appeal under Section 107 of GST Act as beyond limitation. The petitioner contended that the appeal was dismissed due to being filed beyond the prescribed period.

Issue 2: Challenge to order creating demand under Section 74 of GST Act without providing opportunity of hearing:
The petitioner also challenged the order dated 15.03.2022 passed by respondent no.3 creating a demand under Section 74 of GST Act without providing an opportunity of hearing. The petitioner claimed to be a bonafide firm that rectified a mistake in availing ITC but was still served with a notice for a proposed liability. The petitioner sought adjournment to file a reply and for a personal hearing, but the order was passed without granting these opportunities.

The Court noted that the petitioner had challenged both the orders, emphasizing the original order confirming the demand under Section 74 of GST Act without a proper opportunity of hearing. It was observed that the notices issued did not specify the date, time, or venue for a personal hearing, which was a violation of Section 75(4) of the GST Act mandating an opportunity of hearing before an adverse decision.

Referring to a previous judgment, the Court reiterated that compliance with Section 75(4) of the GST Act is mandatory and a violation of this provision amounts to a breach of natural justice principles. Consequently, the Court quashed the order dated 15.03.2022 for being contrary to the mandate of Section 75(4) of GST Act and remanded the matter to respondent no.3 for fresh orders after providing the petitioner with an opportunity of hearing and allowing the filing of a reply to the show-cause notice.

As a result of quashing the original order, the subsequent order dated 29.03.2023 was also quashed. The petition was allowed in the above terms, ensuring that the petitioner receives a fair hearing and due process in accordance with the law.

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