2026 (2) TMI 594 - HC - GST

Quashing of ex parte demand order: conditional deposit ordered, fresh personal hearing and reasoned decision required thereafter.

Quashing of an ex parte demand order was contested on grounds of breach of natural justice and limitation; the court accepted that a reply had been filed ... Quashing of ex-parte demand order - maintainability of the petition as an alternative remedy - opportunity of hearing and principles of natural justice - conditional deposit for adjudication - direction to pass fresh reasoned order after personal hearing - non-apportionment of deposited amount pending consequence of order - HELD THAT:- It is the case of the counsel for the petitioner that post-show cause notice, a reply was tendered, however, the petitioner couldn’t appear for the personal hearing of the matter particularly when there was a default on the part of the advisors so also that of staff in noticing the notice of hearing. The counsel would further urge that the claim is barred by limitation as 2017 liabilities is sought to be imposed on the petitioner without observing the issue of limitation. She would further urge that the issue was subsequently considered and an order was passed thereby closing the liability of the petitioner. Respondent has raised a preliminary objection on maintainability of the petition as an alternative remedy is provided for. We permit the petitioner as undertaken before this Court to deposit the entire amount under the order impugned dated 3rd August, 2024 with the respondent within a period of four weeks from today. In case if the amount is deposited as has been undertaken, the petitioner shall also submit written notes of argument in addition to show cause notice and shall appear for personal hearing before the respondent on 30th March, 2026. The respondent shall pass an order within a period of four weeks thereafter and in case if the order is adverse to the interest of the petitioner, the amount be not apportioned by the respondent for a period of two weeks from the date on which the order is served on the petitioner. Accordingly, the petition along with pending applications, stands allowed and disposed of in the above terms. Issues: Whether the ex-parte demand/DRC-07 order dated 03.08.2024 can be quashed or set aside and whether the petitioner is entitled to a hearing and reconsideration of the impugned order provided the impugned amount is deposited.Analysis: The petition challenges the show cause notice dated 31.05.2024 and the ex-parte demand/DRC-07 order dated 03.08.2024 on grounds including absence of opportunity of personal hearing, limitation, and subsequent closure of liability. A maintainability objection based on availability of alternate remedy was noted. The petitioner undertook to deposit the entire amount stated in the impugned order within four weeks. In view of this undertaking, the respondent was directed to grant a personal hearing to the petitioner (with written notes of argument and reply) and thereafter to pass a reasoned order within four weeks of that hearing. Protective directions were given that, if the subsequent order is adverse to the petitioner, the deposited amount shall not be apportioned by the respondent for a period of two weeks from service of the order on the petitioner. The court expressly did not decide merits of the tax demand and left open the petitioner's right to prefer an appeal against any adverse order.Conclusion: Petition allowed in terms of prayer (B): petitioner to deposit the entire impugned amount within four weeks; respondent to provide personal hearing on 30th March, 2026 and pass a reasoned order within four weeks thereafter; if the order is adverse, the amount shall not be apportioned for two weeks from service of the order; petitioner remains free to prefer appeal.