2026 (3) TMI 289 - HC - GST

Service of notice and right to hearing: defective GST ex parte adjudication quashed; fresh hearing directed.

The article addresses the validity of an ex parte GST adjudication where the show cause-cum-demand notice for July 2017-March 2018 lacked proper service ... Ex parte adjudication - Failure to afford opportunity of hearing - non-service of show cause notice - breach of principles of natural justice - procedural irregularity. Failure to afford opportunity of hearing - Whether the adjudication order passed ex-parte under Section 74 of the GST Act suffers from procedural infirmities and breach of natural justice warranting quashing and fresh consideration. - HELD THAT: - The Court found that no notices in Form GST ASMT-10 under Section 61 were issued prior to the show cause-cum-demand notice and that no adjournment had been granted, contrary to the statutory scheme, evidencing procedural irregularity. The adjudicating authority passed the order without giving an opportunity of hearing or serving any notice of hearing, and there is no documentary evidence on record to show effective service of the show cause notice; the notice was also allegedly uploaded in the portal's 'Additional Notices and Orders' tab rather than in the proper view, which impeded communication. These failures amount to a breach of the principles of natural justice and render the assessment order a product of gross procedural lapse. In view of the prima facie case and the identified procedural defect, the Court directed that the petitioners be permitted to file a physical copy of their reply within a limited period, and required the respondent authority to afford an opportunity of hearing (virtual or physical), pass a speaking order considering the reply and material, and communicate the decision within specified time-frames. The Court therefore quashed the impugned order as vitiated by procedural irregularity and remitted the matter for fresh consideration in accordance with law. [Paras 12, 13, 14, 15, 16] The impugned ex-parte adjudication is set aside for breach of natural justice and procedural irregularity; the petitioners may file a reply and the authority must afford hearing and pass a speaking order on reconsideration within the prescribed schedule. Final Conclusion: The Court quashed the adjudication order dated 02.11.2023 for procedural irregularity and breach of natural justice in respect of the period 'July 2017 to March 2018', directed fresh consideration after affording hearing and filing of reply, and disposed of the writ petition without addressing merits. Issues: Whether the ex parte adjudication and the order dated 02.11.2023 under Section 74 of the Central Goods and Services Tax Act, 2017 can be sustained where the show cause-cum-demand notice was not properly served and no opportunity of hearing was afforded to the petitioners.Analysis: The order under challenge concerns a show cause-cum-demand notice for the period July 2017 to March 2018 and an ex parte order passed without any recorded opportunity of hearing. The record indicates absence of statutory pre-notices in Form GST ASMT-10, alleged incorrect placement of the notice on the portal, and no evidence of service by registered post or email. The question of availability of alternative remedy was considered but the factual breaches of Sections 61 and 75 (including Section 75(4) and 75(5)) and defects in notice and hearing were found to be material. In these circumstances the procedural irregularities and failure to afford an opportunity to be heard render the impugned adjudication prima facie unsustainable, warranting reconsideration by the adjudicating authority in accordance with law.Conclusion: The order dated 02.11.2023 is quashed and set aside. The petitioners are directed to file a physical reply to the show cause-cum-demand notice within 15 days and the respondent authority shall consider the reply, afford an opportunity of hearing (virtual or physical), and pass a speaking order preferably within 3 months, communicating the decision within one week thereafter.Ratio Decidendi: An assessment or adjudication order passed without valid service of the notice and without affording the affected person an opportunity of hearing violates the principles of natural justice and is liable to be quashed, requiring fresh consideration by the competent authority in accordance with statutory procedure.