Natural justice in GST demand notices: defective hearing opportunity led to quashing of the demand proceedings.

Demand proceedings under the Odisha GST Act were quashed because the show cause notice did not properly afford an effective opportunity to reply and be heard. Although the notice called for a reply and referred to personal hearing, it did not specify the hearing date, and this was treated as a material procedural defect affecting fairness. The Court held that such a defective notice violates natural justice and cannot sustain the consequential demand. The assessee was granted two weeks to file a reply, with liberty to seek personal hearing in the reply or separately thereafter.

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Issues: Whether the demand notice and consequential proceedings under section 73 of the Odisha Goods and Services Tax Act, 2017 were liable to be set aside for want of a proper opportunity of hearing and for breach of natural justice.

Analysis: The show cause notice required a reply and indicated a personal hearing, but the tabulated particulars did not specify the hearing date. The revenue accepted that further time could be granted for filing reply and that personal hearing could be afforded if sought thereafter. The absence of a proper opportunity in the notice was treated as a material procedural defect affecting fairness in the demand proceedings.

Conclusion: The impugned demand was set aside and quashed. The petitioner was granted two weeks to file reply to the show cause notice, with liberty to seek personal hearing in the reply or separately thereafter.

Ratio Decidendi: A demand proceeding founded on a defective show cause notice that fails to properly afford the assessee an effective opportunity of reply and hearing is liable to be quashed for violation of natural justice.

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