HC Remands GST Order Passed on Non-Notified Date, Subject to 10% Deposit.
Issue
Is a GST demand order legally valid if it is passed on a date that was never notified to the taxpayer for a hearing, especially when the taxpayer had filed a written reply but had failed to appear at the original hearing date?
Facts
- The GST department issued a Show Cause Notice (SCN) that fixed specific dates for both filing a written reply and attending a personal hearing.
- The petitioner filed the written reply but did not attend the scheduled personal hearing.
- The adjudicating authority did not pass any order on that day. No new date or notice for a future hearing was issued.
- Several weeks later, the petitioner sought an adjournment.
- On the same day the adjournment was requested, the authority passed the final demand order, confirming the demand. This order did not provide reasons addressing the objections raised in the petitioner’s written reply.
Decision
- The High Court set aside the impugned demand order, finding it was passed in breach of statutory safeguards (Section 75) and natural justice.
- It held that:
- An adverse order must be reasoned and must deal with the objections raised in the taxpayer’s written reply.
- If an order is not passed on the communicated hearing date, a fresh notice for the next hearing is mandatory. An authority cannot pass an order on a future date at their own convenience without notifying the taxpayer.
- However, the court also noted the petitioner’s own default (failing to attend the first hearing) and the belated filing of the writ petition.
- Therefore, the remand was made conditional. The order was set aside subject to the petitioner depositing 10% of the disputed tax within one month, after which a fresh hearing would be granted.
Key Takeaways
- Fresh Hearing Notice is Mandatory: If an order is not passed on the originally scheduled hearing date, the proceeding is not concluded. The authority must issue a fresh notice with a new date and time before passing an adverse order.
- Orders Must Be “Speaking Orders”: An adjudicating authority is legally bound to consider and provide reasons addressing the points raised in a taxpayer’s written reply. An order that ignores the reply is not a valid, reasoned order.
- No Automatic Waiver of Hearing: A taxpayer’s failure to attend a single hearing does not give the authority a free pass to pass an order on any subsequent date without further intimation.
- Default Can Lead to Conditional Relief: While the department’s procedural breach was fatal to the order, the taxpayer’s own default led the court to grant a conditional remand (requiring a 10% deposit) instead of a simple, unconditional one.
HIGH COURT OF ALLAHABAD
Uday Glass House
v.
State of Uttar Pradesh
Saumitra Dayal Singh and INDRAJEET SHUKLA, JJ.
WRIT TAX No. 4070 of 2025
OCTOBER 6, 2025
Gauransh Mishra and Pranjal Shukla for the Petitioner.
ORDER
1. Heard Shri Pranjal Shukla, learned counsel for the petitioner and Shri Ankur Agarwal, learned counsel for respondent Revenue.
2. Present petition has been filed for the following relief:
“I. issue a writ or direction or pass an order in the nature of Certiorari quashing the impugned demand order and show cause notice dated 27.02.2025 and 28.11.2024 (April 2020 and March 2021) issued by the Deputy Commissioner, State Tax Jurisdiction Aligarh Sector-5 Aligarh (A) Aligarh Uttar Pradesh i.e., the respondent no.2, under section 73 of the State Goods & Service Tax Act (Annexure Nos. 5 and 2 to the writ petition, respectively).”
3. It transpires that petitioner was visited with a show cause notice dated 28.11.2024 fixing the date for reply on 28.12.2024 and date for personal hearing as 06.01.2025. Though the petitioner filed a reply on 17.12.2024, it did not appear before the adjudicating authority on 06.01.2025. On his part the adjudicating authority did not pass any order on the date fixed and did not fix any further date in the proceedings and in any case, no further notice was issued to the petitioner. About one and half month thereafter, on 27.02.2025 both parties suddenly woke up, inasmuch as petitioner appears to have filed an application seeking adjournment and the adjudicating authority passed the final order creating a demand of tax of Rs. 81,17,596.69.
4. The present petition has been filed after about six months therefrom.
5. It has been submitted by learned counsel for petitioner that the impugned order is in violation of principles of natural justice. Neither any date for personal hearing was fixed for 27.02.2025 nor the adjudicating authority has considered the reply furnished by the petitioner on 17.12.2024.
6. On the other hand learned counsel for Revenue has submitted, in the first place, there are laches on part of petitioner in approaching the Court and second having failed to appear on the date fixed for personal hearing, the petitioner cannot claim any prejudice.
7. Having heard counsel for parties and having perused the records, in the first place it cannot be denied that under the provisions of U.P. G.S.T Act, 2017 opportunity of personal hearing demanded by the noticee, must be provided by the adjudicating authority, unless specific reasons are assigned. Second, it is equally settled in law that any adverse order that carries civil consequences must be founded on reasons to support the conclusions and where such an order is preceded by a show cause notice to which reply has also been furnished by the noticee, the order must contain reasons to deal with the objections contained in such reply. Third, where the order is not passed on the date communicated to the noticee, a further notice for the next date of hearing must be issued before a valid order may be passed.
8. In the present case, those settled principles have not been followed. Neither reasons appear to have been assigned to deal with the objections raised by the petitioner nor any further notice was issued to the petitioner for the date 27.02.2025.
9. At the same time, we also cannot overlook the fact that the petitioner had due notice of the date fixed i.e. 06.01.2025, inasmuch as that date was communicated to him vide show cause notice dated 28.11.2024 wherein amongst others the petitioner was also required to file reply. That part of the notice was complied. Therefore, its further conduct in not appearing on the date fixed is unexplained. Further the petitioner slept over the situation for one and half month. Curiously it filed the adjournment application on the very date when the adjudication order came to be passed.
10. Though we are not in a position to and are also not inclined to draw any firm inference in that regard, it does appear from the conduct of the parties that there may have existed some informal communication between them that may have led to the order being passed on 27.02.2025, the very date on which coincidentally, the petitioner filed the adjournment application. Further, the petitioner chose not to challenge the impugned order either through appeal or before this Court, with expedience. The writ petition has been filed beyond 90 days- reasonable time available to a person to avail the extraordinary remedy. Further, his explanation contained in paragraph-35 is vague and generic as may not inspire any confidence with the Court that the petitioner was prevented from approaching the Court for reasons beyond his control. Apparently the petitioner has chosen a time of his convenience, to approach the Court.
11. Therefore, on the above appraisal of facts and in the context of operating law while we find that the impugned order may not be sustainable for the defects noted above, at the same time, the conduct of the petitioner warrants that appropriate order may be passed to balance the interest of justice and also to ensure that the writ remedy is not availed casually or with unexplained laches, as may not serve the best interests of justice.
12. Accordingly the impugned order is set aside subject to petitioner depositing Rs.8,17,000/- (roughly 10% of the disputed demand of tax), within a period of one month from today.
13. Subject to that deposit being made the impugned order shall stand set aside. Consequently the adjudicating authority may fix fresh date for personal hearing and on such date or further date the final order may be passed, not later than 31.01.2026, by appropriate adjudicating authority to be nominated by Commissioner concerned, other than the officer who had passed the impugned order.
13. Petitioner undertakes to not take any undue or long adjournment.
14. With the aforesaid observations and directions writ petition stands disposed of.
15. The amount to be deposited shall remain subject to final order that may be passed, in compliance of this order.