GST Demand Order Quashed: Procedural Fairness Prevails, Taxpayer Granted Right to Be Heard and Present Defense

HC allowed the petition challenging GST demand order. The court found the original order under Section 73(9) violated natural justice principles by not providing a hearing opportunity. The order dated 29.08.2022 and subsequent appeal dismissal order were quashed. The matter was remanded for fresh proceedings with proper hearing and opportunity to respond to show-cause notice.

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Issues involved:
The issues involved in the judgment are the dismissal of an appeal under Section 107 of GST Act as beyond limitation and the creation of a demand under Section 73(9) of GST Act without providing an opportunity of hearing.

Dismissal of appeal under Section 107 of GST Act:
The petitioner challenged the order dated 02.09.2023, which dismissed the appeal under Section 107 of GST Act as beyond limitation. The petitioner contended that they are a bonafide firm conducting business lawfully and claimed ITC. A notice was served on 06.08.2021 regarding discrepancies in the return after scrutiny. The record showed that a show-cause notice under Section 73 of GST Act was sent to the petitioner on 28.06.2022, followed by a reminder on 22.08.2022. An order was passed on 29.08.2022 without granting a hearing as mandated by Section 75(4) of GST Act. The appeal against this order was dismissed due to being beyond the prescribed period of limitation.

Creation of demand under Section 73(9) of GST Act without hearing:
The petitioner challenged the order dated 29.08.2022 where a demand was created under Section 73(9) of GST Act without providing an opportunity of hearing. The petitioner emphasized challenging the original order confirming the demand under Section 73(9) of GST Act without a hearing. The notices issued did not mention the date, time, or venue of the personal hearing, and no personal hearing was granted as per the standing counsel's statement. The Court held that Section 75(4) of GST Act mandates granting an opportunity of hearing when an adverse decision is contemplated, citing previous interpretations and judgments. The original order was deemed contrary to the mandate of Section 75(4) and violative of natural justice principles, leading to its quashing.

Remand and fresh orders:
The Court quashed the order dated 29.08.2022 and subsequently the order dated 02.09.2023 as a result. The matter was remanded to respondent no.3 to pass fresh orders after providing an opportunity of hearing and allowing the petitioner to respond to the show-cause notice in compliance with the law. Ultimately, the petition was allowed in the mentioned terms.

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