GST order quashed for denying personal hearing despite specific request violating Section 75(4) natural justice principles

Bombay HC quashed an order dated 18th August 2023 passed under CGST Act for violation of natural justice principles. The petitioner specifically requested personal hearing in reply dated 4th July 2023, but respondent failed to provide opportunity before passing adverse order. Court held this violated Section 75(4) of CGST Act which mandates personal hearing. Since the impugned order was passed without affording personal hearing despite specific request and adverse decision, it contravened natural justice principles and statutory provisions, warranting quashing.

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Issues involved:
The issues involved in the judgment are quashing of an Order u/s 75(4) of the Central Goods and Service Tax Act, 2017 and violation of principles of natural justice.

Summary:

Issue 1: Quashing of Order u/s 75(4) of the CGST Act:
The Writ Petition filed under Article 226 of the Constitution of India sought to quash an Order dated 18th August 2023 passed by Respondent Nos. 3, alleging it was contrary to Section 75(4) of the CGST Act and violated natural justice. Petitioner No. 1, a private company, availed Input Tax Credit (ITC) and disagreed with discrepancies noted in the returns filed. Despite seeking a personal hearing, Respondent No. 3 issued an Order without granting a personal hearing, leading to a Show Cause Notice under Section 73 of the CGST Act. Petitioner No. 1 made detailed submissions denying the allegations but the impugned Order confirmed a demand without a personal hearing, contrary to Section 75(4) of the Act.

Issue 2: Violation of Principles of Natural Justice:
The Respondents argued that no personal hearing was required as Petitioner No. 1 did not mark 'YES' for the option of personal hearing. However, Petitioner No. 1 had specifically sought a personal hearing in its reply dated 4th July 2023. Section 75(4) mandates a personal hearing upon request or when an adverse decision is contemplated, even if not requested. The Court held that the Order dated 18th August 2023 was passed without a personal hearing, violating natural justice and the provisions of Section 75(4) of the CGST Act. The Court referred to previous decisions supporting this view and quashed the impugned Order, directing Respondent No. 3 to provide a personal hearing and pass an appropriate order within four weeks.

Conclusion:
The High Court of Bombay quashed the impugned Order, instructed a personal hearing for Petitioner No. 1, and directed Respondent No. 3 to pass an order in accordance with the law within four weeks. No costs were awarded in the present case.

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