2026 (3) TMI 1051 - HC - GST

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 ... Validity of ex-parte demand order and related show cause proceedings - non-compliance with the requirements of effective communication - denial of opportunity of personal hearing - violation of principles of natural justice. Failure to provide effective notice and opportunity of hearing violates principles of natural justice - HELD THAT:- Having regards to the facts and circumstances of the case, the impugned ex-parte Demand Order bearing Reference No. ZD100424037900X dated 29.04.2024 along with the summary order in form GST DRC-07 dated 29.04.2024 (Annexure P/1 series) issued by the Deputy Commissioner of State Tax, Katihar Circle, Katihar are quashed. The respondents are hereby directed to undertake fresh steps strictly in accordance with the provisions contained under the Bihar Goods and Services Tax Act, 2017 and after providing an adequate opportunity of hearing to the petitioner, the final order shall be passed. Such exercise shall be completed within a period of six months from the date of receipt/production of a copy of this order. It is needless to state that in case the petitioner does not co-operate with the concerned officials, the respondents shall be free to proceed ex-parte. Final Conclusion: The writ petition is allowed: the ex-parte demand order for April 2018 - March 2019 is quashed and the matter is remitted for fresh adjudication in accordance with the BGST Act with an adequate opportunity of hearing to be provided, to be completed within six months; non-cooperation by the petitioner permits respondents to proceed ex parte. 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.