2026 (1) TMI 1141 - HC - GST

Show-cause proceedings under CGST Act: lack of personal hearing and non-consideration of reply led to remand for fresh consideration.

Challenge to show-cause proceedings under the CGST framework for alleged failure to provide personal hearing and non-consideration of the taxpayer's ... Failure to provide opportunity of personal hearing - non-consideration of reply to show-cause notice - remand for fresh consideration - Karnataka High Court judicial review of quasi-judicial order - Section 74, CGST Act, 2017 - HELD THAT:- The 2nd respondent issued show-cause dated 02.03.2021 under Section 74 of CGST/KGST Act, pursuant to which, the petitioner filed its reply dated 18.02.2022 to the aforesaid show-cause notice. The 2nd respondent without considering the reply filed by the petitioner and not providing sufficient opportunity of personal hearing. A perusal of the material on record including the impugned order will indicate that it is an undisputed fact that the petitioner filed its reply to the show-cause notice and the impugned order has been passed without granting an opportunity to the petitioner to produce necessary documents. Thus, by adopting a justice oriented approach and in order to provide one more opportunity to the petitioner, it is just and appropriate to set aside the impugned order and remit the matter back to the respondents for reconsideration afresh in accordance with law by issuing certain directions. Petition is hereby allowed. Issues: Whether the impugned order dated 16.03.2022 passed under Section 74 (and penalty under Section 73(10)) can be set aside on the ground that the authority did not consider the petitioners reply and did not grant a reasonable opportunity of personal hearing, and whether the matter should be remitted for fresh consideration.Analysis: The petitioner filed a reply to the show-cause notice prior to the impugned order. The impugned order was passed without affording the petitioner a sufficient opportunity to produce documents or to be heard in person. The absence of a reasonable opportunity to present relevant submissions and documents engages principles of natural justice and procedural fairness. In light of the procedural defect, a remedy that permits fresh consideration by the authority after affording the petitioner a proper opportunity to be heard is appropriate. The remedial directions include setting aside the impugned order, permitting submission of the reply and documents on a specified date, affording a sufficient hearing, and directing final decision within a limited time frame.Conclusion: The impugned order dated 16.03.2022 is set aside and the matter is remitted to the authority for fresh consideration after affording the petitioner a reasonable opportunity of personal hearing; the petition is allowed in favour of the assessee.