Gujarat High Court Quashes Demand: Mandatory Specific Intimation of Hearing Date, Time, and Venue

1. The Core Dispute: Failure to Intimate Hearing Details

The petitioner (Aarti Enterprise) challenged an adjudication order passed under Section 73 that confirmed a demand for short reversal of Input Tax Credit (ITC) under Section 17(2).

The Cause of Delay: The assessee’s accountant was diagnosed with cancer, preventing a timely response to the initial notice in Form DRC-01A.
The Procedural Flaw: While the Revenue issued the notice and sent three reminders (as required under Section 75(5)), they failed to mention the date, time, or venue of the personal hearing in any of these communications.
The Order: Despite the missing details, the authorities passed a final order, recording that “ample opportunity” was granted but the assessee failed to remain present.

2. The Legal Analysis: Substance of Natural Justice

The High Court held that “ample opportunity” is a legal standard that cannot be satisfied by mere reminders if the specifics of the hearing are withheld.

I. Mandatory Nature of Section 75(4)

The Court emphasized that Section 75(4) makes a personal hearing mandatory whenever an adverse decision is contemplated against a person, even if the person has not explicitly requested it.

II. Specificity of Information

The Court clarified the following procedural requirements:

Initial Notice (DRC-01): It is not strictly mandatory to incorporate hearing details in the initial DRC-01, as the need for a hearing often depends on the assessee’s reply.
Subsequent Proceedings: However, before passing a final order, the authorities must specifically intimate the date, time, and venue of the hearing.
Meaningless Reminders: Issuing reminders to file a reply is not a substitute for fixing a hearing date. Without a fixed schedule, the assessee is “left in the dark.”

3. Final Order and Directions

The Court found that the principles of natural justice were fundamentally violated.

Outcome: The Adjudication Order and all subsequent recovery proceedings were quashed and set aside.
Remand: The matter was remanded back to the adjudicating authority.
Direction: The authority must now issue a specific intimation regarding the date, time, and venue for a personal appearance. The Court further clarified that if the assessee fails to appear after such specific intimation, the authority may proceed to pass an order on merits.

Key Takeaways for Taxpayers

Check Your DRC-01 Table: If you receive a notice where the “Details of Personal Hearing” table is left blank or marked “NA,” the notice is procedurally defective for the purpose of passing an adverse order.
Section 75(5) Adjournments: You are entitled to a maximum of three adjournments (four hearing dates in total). However, these can only be counted if the original date was properly communicated.
Portal Vigilance: While the Department is increasingly using the portal for reminders, the legal requirement for a “meaningful opportunity” remains a personal hearing with fixed coordinates.

HIGH COURT OF GUJARAT

Aarti Enterprise

State of Gujarat^*

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 17409 of 2025

JANUARY 22, 2026

Abhay Y. Desai for the Petitioner. Ms. Nimisha Parekh, Assistant Government Pleader for the Respondent.

JUDGMENT

A.S. Supehia, J.- RULE returnable forthwith. Learned Assistant Government Pleader Ms.Nimisha Parekh waives service of notice of rule on behalf of the respondent. Since short issue is involved in the present writ petition, the matter is finally decided today.

2 The brief facts of the case are as under:

2.1 The cause of filing the present writ petition emanates from the system based notice in Form DRC-01A dated 09.11.2024 passed by the respondent Authority No. 2 for the Financial Year 2020-21 indicating that the petitioner has made a short reversal of the Input Tax Credit (ITC) under Section 17(2) of the Gujarat State Goods & Service Tax Act, (for short “GST” Act) 2017 read with Rule 42 of the Gujarat Goods & Service Tax (SGST Rules), 2017, by assuming that the entire ITC availed of by the petitioner during the said period is common ITC and hence the ITC proportionate to the exempted supplies is liable for reversal.

2.2 It is the case of the petitioner that since his Accountant was diagnosed with cancer, he could not remain present and respond to the notice and the respondent authorities issued notice on 21.11.2024 on the portal. The petitioner, in absence of any knowledge of the notice could not reply to the same and it appears that the respondent authorities issued three reminders on 31.12.2024, 08.01.2025, and 17.01.2025. However, the respondent authorities, thereafter, passed an order along with a summary thereof in Form DRC-07 dated 05.02.2025 confirming the demands of the short reversal of ITC.

3 At the outset, learned advocate Mr.Abhay Desai appearing for the petitioner, has submitted that the impugned notice is in violation of principles of natural justice and is also in violation of provisions of Section 75(5) of the G.S.T Act, as though the petitioner was issued the reminders, however, they never intimated the date of personal hearing and in fact, the impugned order has been passed in violation of principles of natural justice and in violation of provisions of Section 75(4) as well as Section 75(5) of the G.S.T Act. Moreover, it has been pointed out that the respondent authorities have not passed a reasoned order and a cryptic order has been passed.

3.1 In support of his submissions, learned advocate Mr.Abhay Desai for the petitioner, placed reliance on the judgement dated 03.12.2025 passed by this Court in Special Civil Application No. 7183 of 2025/Gateway Exim v. State of Gujarat (Gujarat). Thus, it is urged that the writ petition may be allowed by setting aside the impugned order.

4 Per Contra, learned Assistant Government Pleader Ms.Nimisha Parekh appearing for the respondents has submitted that the petitioner, though was offered an opportunity of hearing and issued three reminders as mentioned hereinabove, however, neither the petitioner filed any reply nor he remained present for personal hearing. Thus, it is urged that the writ petition may not be entertained.

5 The facts which are established from record is that the petitioner was issued notice in Form GST DRC-01 under Section 73(5) of the G.S.T Act on 21.11.2024 and in that form in the details of personal hearing and due date to file replies, it is noted by us that, neither the respondent State Tax Officer has mentioned about the personal hearing nor there is time or venue. In all the three columns, it is mentioned as N.A (Not Applicable).

5.1 Thereafter, the petitioner has been issued reminders on 31.12.2024, 08.01.2025 and 17.01.2025, three reminders as required under the provisions of Section 75(5) of the G.S.T Act. On a bare perusal of the same, it is revealed that the petitioner is not intimated of either the date, time or venue of personal hearing and thereafter the impugned order is passed by recording that though an ample opportunity was granted to the petitioner to remain present, he has not remained present. This is the only reason which is assigned in the impugned order. It is not in dispute that three opportunities are required to be given and as per provisions of section 75(5) of the G.S.T Act, three adjournments are required to be given. Section 75 of the G.S.T Act reads as under.

“Section 75. General provisions relating to determination of tax.-

(1) Where the service of notice or issuance of order is stayed by an order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74 [or sub-sections (2) and (7) of section 74A], as the case may be.

(2) Where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or any wilful-misstatement suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice were issued under sub-section (1) of section 73

[(2A) Where any Appellate Authority or Appellate Tribunal or court concludes that the penalty under clause (ii) of sub-section (5) of section 74A is not sustainable for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the penalty shall be payable by such person. under clause (1) of sub-section (5) of section 74A]

(3) Where any order is required to be issued in pursuant of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction.

(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:

Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.

(6) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.

(7) The amount of tax, Interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.

(8) Where the Appellate Authority or Appellate Tribunal or court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly, taking into account the amount of tax so modified.

(9) The interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.

[(10) The adjudication proceedings shall be deemed to be concluded, if the order is not issued within the period specified in sub-section (10) of section 73 or in sub-section (10) of section 74 or in sub-section (7) of section 74A.

(11) An issue on which the Appellate Authority or the Appellate Tribunal or the High Court has given its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal to the Appellate Tribunal or the High Court or the Supreme Court against such decision of the Appellate Authority or the Appellate Tribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Authority and that of the Appellate Tribunal or the date of decision of the Appellate Tribunal and that of the High Court or the date of the decision of the High Court and that of the Supreme Court shall be excluded in computing the period referred to in subsection (10) of section 73 or sub-section (10) of section 74 [or sub-sections (2) and (7) of section 74A] where proceedings are initiated by way of issue of a show cause notice under the said sections.

(12) Notwithstanding anything contained in section 73 or section 74 [or section 74A], where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid. either wholly or partly, or any amount of interest payable on such tax remains unpaid the same shall be recovered under the provisions of section 79

[Explanation.-For the purposes of this sub-section, the expression “self-assessed tax shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.]

(13) Where any penalty is imposed under section 73 or section 74 [or section 74A], no penalty for the same act or omission shall be imposed on the same person under any other provision of this Act.”

5.2 We are of the considered opinion that in case the aforesaid details of personal hearing are not incorporated in the notice DRC 01, before final order is passed against the assessee, he is required to be intimated the date, time and venue of personal hearing. We further clarify that respondents are not in fact required to issue Show Cause Notice calling upon him, but they are required to intimate the date, time and venue of personal hearing.

5.3 The second ground on which the impugned order is required to be set aside is that the same is absolutely an unreasoned order as though, the petitioner has remained absent in the proceedings, however, the same cannot absolve the State Tax Officer in passing the reasoned order after considering all the materials.

6. Hence, the writ petition succeeds. The impugned order dated 05.02.2025 issued by the respondent No.2 and subsequent proceedings arising from the impugned orders are hereby quashed and set aside. The matter is remanded to the jurisdictional State Tax Officer. He shall pass a fresh order after affording an opportunity of hearing to the petitioner an in accordance with law within a period of 12 weeks from the date of receipt of certified copy of this order. Rule is made absolute accordingly with no orders as to costs.