2026 (2) TMI 827 - HC - GST

Natural Justice breached: adjudication proceeded in undue haste and order quashed with remand for fresh hearing.

Challenge concerned whether a time bound adjudication under the GST framework violated principles of natural justice by proceeding despite notice of ... Principles of natural justice - Undue haste in administrative action - Arbitrary exercise of power - Violation of Article 14 of the Constitution - Rectification u/s 161 of the GST Act - Adjudication u/s 74 of the GST Act - Limitation as mixed question of law and fact - HELD THAT:- It is ex facie on record that from the Order-in-Original dated 19.12.2025, the authority has finalized the Demand-cum-Show Cause Notice and passed adjudication order under Section 74 of the GST Act. This Court is of the considered view that the authority has passed order with undue haste, thereby caused serious prejudice to the petitioner. Since there has been flagrant violation of principles of natural justice, the order impugned, i.e., 19.12.2025 cannot be held to be sustained. Adherence to principles of natural justice is for doing substantive justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. When the present cases are considered in the light of the above exposition of law, the order impugned being perceived as outcome of arbitrary exercise of power offending Article 14 of the Constitution of India as undue haste shown by the Proper Officer is patent on the face of the record. Writ petitions allowed; impugned Order-in-Original dated 19.12.2025 quashed for breach of principles of natural justice and undue haste; petitioner permitted to file reply within seven days and the authority directed to afford personal hearing and pass a fresh adjudication within fifteen days, with limitation and rectification issues to be considered afresh. Issues: Whether the Order-in-Original dated 19.12.2025 passed under Section 74 of the GST Act (Central and Odisha) is vitiated for violation of principles of natural justice and undue haste in adjudication, and whether the order should be quashed and remitted for fresh adjudication with opportunity of hearing.Analysis: The Court examined the sequence of events: an original Demand-cum-Show Cause Notice dated 26.06.2025, an application for rectification under Section 161, the Court's direction dated 25.09.2025 to consider the rectification application and proceed in connection with the 26.06.2025 notice, issuance of fresh notices for FY 2018-19 to 2022-23, filing of W.P.(C) No.36758 of 2025, intimation to the authority on 18.12.2025 about the pending writ, and the authority's passing of the adjudication order on 19.12.2025. The adjudication record shows the authority proceeded on a time-bound basis citing the statutory deadline without awaiting the outcome of the pending writ and after being informed of the challenge. The Court applied established principles that administrative action must be fair, not arbitrary, and must afford an opportunity of hearing; actions taken in undue haste or that display a colourable exercise of power offend Article 14 and the rule of law. The Court found on the record that the authority finalized the demand notwithstanding the pendency of related judicial proceedings and did so in a manner that caused prejudice to the petitioner by failing to afford a proper hearing and by acting with undue haste.Conclusion: The Order-in-Original dated 19.12.2025 is quashed. The petitioner is directed to file explanation/reply/objection within seven days and the authority shall consider the Demand-cum-Show Cause Notice dated 17.11.2025 read with summary dated 25.11.2025 and pass a fresh order within fifteen days after affording an opportunity of personal hearing. The writ petitions are allowed in favour of the petitioner.