Appellate Order Quashed for Denial of Hearing After Adjournment Request; Remanded on Condition of Additional Deposit.

Issue

Whether the Appellate Authority (Commissioner Appeals) violated the principles of natural justice by passing an order on the merits of the case without granting a personal hearing, specifically after the appellant had sought an adjournment for the scheduled hearing.

Facts

Context: The petitioner faced GST demands for the periods 2017-2018 and 2018-2019, confirmed via Form GST DRC-07.
The Appeal: Aggrieved by the adjudication orders, the petitioner filed statutory appeals in Form GST APL-01 before the Appellate Authority.
The Procedural Lapse: A personal hearing was scheduled. The petitioner sought an adjournment (postponement) of the hearing.
The Action: Instead of granting the adjournment or fixing a new date, the Appellate Commissioner proceeded to decide the matter on its merits and passed appellate orders in Form GST APL-04.
The Challenge: The petitioner filed writ petitions arguing that deciding the appeal without affording a personal hearing, especially when an adjournment was requested, constituted a denial of natural justice.

Decision

The Madras High Court ruled in favour of the assessee and quashed the impugned appellate orders.
Violation of Natural Justice: The Court held that the Appellate Authority’s failure to grant a personal hearing, particularly after an adjournment request, deprived the petitioner of a fair opportunity to present their case.
Remand for De Novo Consideration: The matters were remitted back to the Appellate Authority to be decided afresh (de novo) strictly after affording a due opportunity of personal hearing to the petitioner.
Conditional Relief: To balance the equities, the Court imposed a condition:
- The petitioner was directed to deposit the balance 10% of the disputed tax.
- Note: Since 10% is the standard pre-deposit for filing an appeal (Section 107), this “balance 10%” likely implies an additional 10%, bringing the total deposit to 20% of the disputed tax (similar to the requirement for a Tribunal appeal).
Timeline: Upon such deposit, the Appellate Authority was directed to pass fresh orders within three months.

Key Takeaways

Right to Adjournment (Limited): While not absolute, the right to a personal hearing is statutory (Section 107(8)). If an adjournment is sought for valid reasons, the authority should typically grant it (up to 3 times as per statute) rather than passing an ex parte order immediately.
Appellate Stage Hearing is Mandatory: The principles of natural justice apply with equal force at the appellate stage. An Appellate Commissioner cannot dismiss an appeal or decide it on merits without hearing the appellant.
Cost of Remand: Seeking relief from the High Court often comes with a financial condition. Here, the petitioner had to lock in an additional 10% of the disputed tax to get a fresh hearing.
De Novo Proceedings: The quashing of the appellate order resets the appeal process, allowing the petitioner to argue the case from scratch before the Commissioner.

HIGH COURT OF MADRAS

Tvl. Arokya Enterprises

Deputy Commissioner (ST)^*

C.Saravanan, J.

W.P. Nos. 42626 and 42633 of 2025
W.M.P. Nos. 47675, 47678, 47679 and 47680 of 2025

NOVEMBER 6, 2025

R.Balachandar for the Petitioner. Mrs.K.Vasantha Mala, Govt. Adv., C.Mohan and A.Rexy Josephine Mary for the Respondent.

ORDER

1. The petitioner has challenged respective orders passed by the respondent, acting as the Appellate Authority, dated 29.11.2023 and 30.11.2023, as detailed below:

W.P.No.42626 of 2025
Sl. No.	Assessment Year	Order in Form GST DRC – 07	Copy of Form GST – APL 01	Impugned order in Form GST APL-04
1.	2018 – 2019	05.02.2021	22.02.2022	29.11.2023
W.P.No.42633 of 2025
Sl. No.	Assessment Year	Order in Form GST DRC – 07	Copy of Form GST – APL 01	Impugned order in Form GST APL-04
1.	2017 – 2018	05.02.2021	22.02.2022	30.11.2023

2. This impugned orders have been passed on merits. However, it is contention of the petitioner that the same have been passed without affording an opportunity of being heard.

3. It is submitted that though the cases were fixed for hearing on 29.11.2023, when the petitioner sought an adjournment, the Appellate Commissioner proceeded to pass the impugned orders on the very same day without granting further adjournment. Hence, it is submitted that the impugned orders are arbitrary and liable to be interfered with.

4. It is further submitted that the orders were unsigned, and the petitioner became aware of the same only upon receipt of the recovery notice dated 21.08.2025.

5. It is further submitted that the petitioner was never served with the impugned orders, and therefore, there is an apparent delay in approaching this Court against the orders dated 29.11.2023 and 30.11.2023.

6. The learned counsel for the respondent submits that the impugned orders are well reasoned, do not warrant any interference, and that the Writ Petitions are liable to be dismissed.

7. It is further submitted that the petitioner, in any event, is required to deposit 10% of the balance disputed tax under Section 112 of the respective GST Enactments Act, and the Tribunal having now been notified and constituted, the petitioner may avail the statutory remedy before the Appellate Tribunal.

8. It is further submitted that there is no merit in the challenge to the impugned orders, which are detailed and well-reasoned. The orders have been passed following the decision of the Hon’ble Supreme Court in State of Karnataka v. Ecom Gill Coffee Trading (P.) Ltd (SC)/Civil Appeal No.230 of 2023.

9. It is contended that the petitioner, being a bill trader, had facilitated others to avail ineligible input tax credit, and therefore, does not deserve any indulgence from this Court.

10. Considering the submissions made by the learned counsel for the petitioner and the learned counsel for the respondent, the following directions are issued:

(i)

The impugned orders dated 29.11.2023 and 30.11.2023 are quashed and the matters are remitted back to the first respondent / Appellate Authority to pass fresh orders on merits, after affording due opportunity of personal hearing to the petitioner.

(ii)

The petitioner, shall, however, deposit the balance 10% of the disputed tax amount, over and above the amount already deposited at the time of filing the appeals before the respondent.

(iii)

Upon such deposit of 10% of the disputed tax against the demand confirmed in each of the impugned orders, the first respondent shall pass de nova orders after hearing the petitioner. remitted back to the first respondent-Appellate Authority to pass a fresh order on merits after hearing the petitioner.

(iv)

The petitioner shall co-operate with the first respondent / Appellate Authority during the course of the proceedings.

(v)

The first respondent shall endeavour to pass final orders, after hearing the petitioner, as expeditiously as possible and in any event within a period of three (3) months from the date of receipt of a copy of this order.

11. With the above directions, these Writ Petitions are disposed of.

12. No costs. Consequently, connected W.M.Ps are closed.