Legal Challenge Succeeds: GST Demand Order Quashed Due to Procedural Violation of Mandatory Personal Hearing Rights

HC allowed the writ petition challenging a GST demand order. The court found a violation of natural justice as the respondent failed to provide a mandatory personal hearing under Section 75(4) of CGST Act. The impugned order was set aside, and the matter was remanded for fresh consideration with a 14-day notice to the petitioner for a hearing.

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Issues:
Challenge to proceedings in Form GST DRC-07 dated 29.04.2024 and request to quash it based on lack of opportunity of hearing and violation of principles of natural justice.

Detailed Analysis:
The petitioner, an assessee under the CGST/SGST Act, received a show cause notice in Form DRC-01 dated 27.12.2023, demanding reversal of ITC availed due to alleged non-payment of tax by the supplier. The respondent confirmed this demand through an order dated 29.04.2024, without granting the petitioner an opportunity of personal hearing. The petitioner contended that Section 75(4) of the CGST Act mandates providing a hearing before passing an adverse order. The petitioner's counsel argued that the lack of a hearing violated both the statutory provision and principles of natural justice, urging the court to set aside the impugned order.

During the proceedings, the respondent admitted that no personal hearing was granted to the petitioner post the submission of their reply to the show cause notice. Consequently, the court considered the arguments from both sides and reviewed the available records. It noted the mandatory nature of providing a hearing under Section 75(4) of the CGST Act and the violation of principles of natural justice in the current case due to the absence of a hearing. Therefore, the court decided to set aside the impugned order.

As a result, the court issued the following directions: Firstly, the impugned order dated 29.04.2024 was set aside. Secondly, the matter was remanded to the respondent for fresh consideration, with a specific directive to issue a clear 14-day notice to the petitioner, allowing for a personal hearing. The respondent was instructed to consider the petitioner's filed reply, conduct a full hearing, and decide the matter in accordance with the law. Ultimately, the writ petition was allowed on the mentioned terms without any costs, and the connected Miscellaneous Petitions were closed.

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