Effective communication and right to personal hearing: ex parte GST demand quashed and remitted for fresh adjudication.

Challenge to an ex parte tax demand for April 2018-March 2019 succeeds on grounds of defective communication and denial of personal hearing; the demand was recorded without applying necessary technical yardsticks (notably coal consumption relative to brick production). The operative remedy ordered is quashing the impugned demand and remitting the matter for fresh adjudication under the Bihar Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017, with directions to apply statutory assessment procedures, afford an adequate personal hearing and complete the reassessment within six months.

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Issues: Whether the ex-parte demand order and related show cause proceedings for the tax period April 2018-March 2019 are invalid for want of effective communication and denial of opportunity of personal hearing, and whether the matters should be quashed and remitted for fresh adjudication.

Analysis: The Court examined whether the impugned ex-parte Demand Order and antecedent show cause notice complied with the requirements of effective communication and opportunity of hearing under the relevant GST law. The Court considered that technical assessment issues (including the need to apply appropriate yardsticks relating coal consumption vis-a -vis brick production) were not examined before recording the demand and that no adequate opportunity of personal hearing had been afforded. The Court relied on the need for fresh assessment strictly in accordance with the statutory scheme and for providing an adequate hearing opportunity, directing completion of the exercise within a specified timeframe.

Conclusion: The impugned ex-parte Demand Order dated 29.04.2024 and related proceedings are quashed and the matter is remitted to the competent authority for fresh adjudication in accordance with the Bihar Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 after providing an adequate opportunity of personal hearing; the fresh exercise is to be completed within six months from receipt of a copy of this order.

Ratio Decidendi: Where a tax demand is recorded without application of necessary technical yardsticks and without effective communication or opportunity of personal hearing, the demand may be quashed and remitted for fresh adjudication with direction to follow the statutory procedure and afford an adequate hearing.

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