Denial of personal hearing under Section 73 GST vitiated limitation-based dismissal; orders quashed, matter remitted for hearing

HC held that dismissal of the appeal on limitation grounds was vitiated by denial of personal hearing under Section 73 of the GST Act, violating principles of natural justice. Citing that personal hearing must ordinarily be afforded before any adverse adjudication, the Court quashed the impugned orders dated 31.12.2023 and 23.09.2025 and allowed the petition, directing that proceedings comply with the requirement of offering a hearing before any further action.

---

---

ISSUES PRESENTED AND CONSIDERED

1. Whether an order passed under Section 73 of the U.P. Goods and Services Tax Act, 2017 is sustainable when no opportunity of personal hearing was afforded to the assessee before adjudication.

2. Whether an appellate order dismissing an appeal as time-barred can stand when the impugned adjudication order itself is challenged on the ground of denial of personal hearing.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of adjudication under Section 73 without opportunity of personal hearing

Legal framework: Section 75(4) of the Act requires that "An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person." The principle that opportunity of personal hearing is basic to procedural law under taxing statutes was treated as a foundational requirement.

Precedent Treatment: The Court applied and followed a prior Division Bench decision of this Court addressing identical procedural infirmities in GST adjudication, holding that revenue authorities must provide personal hearing before passing adverse adjudication orders. That precedent was adopted rather than distinguished or overruled.

Interpretation and reasoning: The Court examined the record and found repeated appearances and written replies by the noticee on specified dates, but no further notice fixing a date/time for personal hearing and no grant of an oral hearing prior to issuance of the final merit order. The Court observed that merely recording submission of replies in response to show-cause notices does not substitute for an opportunity of personal hearing contemplated by the statute. Administrative practice showing the common omission (Office Memorandum guidance requiring explicit date/time of personal hearing and sequencing of reply and hearing) reinforced the conclusion that personal hearing is mandatory unless validly waived or the noticee fails to attend after being afforded the opportunity.

Ratio vs. Obiter: Ratio - It is obligatory to offer personal hearing before passing an adverse order in adjudication under the GST Act; absence of such hearing renders the order unsustainable, subject to the limited exceptions noted (waiver or failure to avail an afforded hearing). Obiter - Observations about prevalent administrative practices and specific recommended sequencing (reply date prior to hearing date) serve as persuasive guidance but are ancillary to the central holding.

Conclusions: The adjudication order under Section 73 was quashed because the statutory and procedural requirement of personal hearing was not satisfied. The Court held that if the noticee waives the hearing or, after being granted a hearing, fails to attend, the authority may proceed ex parte; absent those facts, denial of hearing is fatal.

Issue 2: Fate of appellate dismissal on limitation ground where impugned adjudication is vitiated for denial of hearing

Legal framework: Appeals lie against adjudication orders; appellate scrutiny may be rendered nugatory if the impugned adjudication is void for procedural infirmity. The appellate limitation doctrine does not validate a defective parent order.

Precedent Treatment: The Court did not rely on any contrary authority to sustain a limitation dismissal where the underlying order is void for breach of mandatory procedural safeguards. Instead, it treated the appellate dismissal as necessarily falling with the quashing of the adjudication order.

Interpretation and reasoning: Because the adjudication order was set aside for failure to provide personal hearing, the appellate order dismissing the appeal as barred by limitation could not operate independently to sustain any adverse consequence. The appellate order was quashed along with the adjudication order to enable fresh adjudication after statutorily mandated opportunity of hearing.

Ratio vs. Obiter: Ratio - An appellate dismissal founded upon or following an adjudication order that is itself vitiated by denial of personal hearing cannot stand and must be set aside to allow fresh decision-making with the required hearing. Obiter - No extended discussion of limitation doctrine nuances was necessary beyond its dependence on the validity of the parent adjudication.

Conclusions: The appellate order dismissing the appeal as beyond limitation was quashed in consequence of quashing the adjudication order. The matter was remanded for fresh adjudication after affording an opportunity of personal hearing to the noticee.

Ancillary Observations and Directions

1. Administrative guidance (Office Memorandum) highlighting recurrent defects-non-specification of date/time of personal hearing, improper sequencing of reply and hearing dates, and mismatch between hearing date and date of order-was relied on as support for the proposition that procedural mandates must be followed consistently by field formations.

2. The Court directed remand to the assessing authority to pass a fresh order after giving an opportunity of personal hearing, thereby preserving the authority's power to decide merits once the procedural requirement is satisfied.

3. Cross-reference: The Court emphasized that where a hearing is properly offered and the noticee knowingly waives it or fails to avail it, the authority may proceed ex parte; this delineates the limited exceptions to the mandatory hearing requirement and should guide future adjudications.

---