Ex parte order passed without serving a hearing notice violates

Ex parte order passed without serving a hearing notice violates natural justice and cannot be sustained.

Issue

Whether an Order-in-Original confirming a tax demand, interest, and penalty can be legally sustained under Sections 75 and 169 of the CGST/OGST Act when the notice fixing the personal hearing date was not served on the taxpayer until after the adjudication order had already been passed.

Facts

The Assessee-petitioner filed a Writ Petition challenging an Order-in-Original dated 2 February 2026.
The impugned order confirmed a demand against the petitioner regarding alleged excess Input Tax Credit (ITC), short-paid tax, interest, and a consequential penalty.
The petitioner asserted a severe breach of the principles of natural justice, stating that the tax authority disposed of the matter ex parte without serving a notice of the personal hearing.
Records revealed that the hearing notice actually reached the petitioner only after the final Order-in-Original had already been formulated and issued by the department.

Decision

Violation of Audi Alteram Partem: The High Court observed that the petitioner was entirely deprived of a fair opportunity to defend themselves because the notice fixing the hearing date was never served in a timely manner. The principle of audi alteram partem (hear the other side) is deeply ingrained in administrative adjudication, and bypassing it causes inherent prejudice to the taxpayer.
Order Quashed: Since a post-facto receipt of a hearing notice holds no legal validity, the impugned Order-in-Original dated 2 February 2026 was declared unsustainable and quashed.
Remand for Fresh Adjudication: To balance the interests of revenue and equity, the Court relegated the matter back to the original adjudicating authority for a fresh decision.
Final Verdict: The Writ Petition was allowed, the ex parte demand was set aside, and the matter was remanded to the authority with a directive to afford the petitioner an adequate and meaningful opportunity to be heard. The ruling stands in favour of the assessee (matter remanded).

Key Takeaways

Hearing Notice Prior to Order is Mandatory: Section 75(4) of the CGST Act explicitly mandates that an opportunity of personal hearing must be given where an adverse decision is contemplated. Serving a notice after the order is passed is a fatal procedural lapse.
Modes of Service Must Ensure Real Opportunity: Under Section 169, while the department has various prescribed channels to serve notices, the timeline must ensure that the document is received by the taxpayer before the scheduled event, not as a historical footnote.
Remand as the Standard Remedy: When a high court quashes an assessment order solely on the grounds of a violation of natural justice, it typically does not erase the tax liability entirely; instead, it restores the case to the “show cause notice” stage, giving the taxpayer a clean slate to argue their case on merits before the same authority.

HIGH COURT OF ORISSA

Kalinga Trader

Joint Commissioner, GST & Central Excise, Bhubaneswar^*

Harish Tandon, CJ.
and MURAHARI SRI RAMAN, J.

WP(C) No. 6887 of 2026

MARCH 26, 2026

1. The petitioner has filed the instant writ petition assailing the Order-in-Original dated 2^nd February, 2026 passed by the Joint Commissioner, GST & Central Excise Bhubaneswar Commissionerate, Bhubaneswar confirming the demand of an excess availment and utilization of inadmissible Input Tax Credit & short paid/not-paid tax, interest under Section 50(1) of the Central Goods and Services Tax / Odisha Goods and Services Tax Act, 2017, the interest under Section 50(3) of the said Act and the penalty under Section 74 and Section 122 (3) of the said Act.

2. The challenge is basically founded upon the violation of principles of natural justice as the petitioner did not receive the notice fixing a date for the hearing yet the authority proceeded to dispose of the said proceeding in his absence as if the petitioner has the knowledge of the said hearing date.

3. On the last occasion, it was made known to the counsel appearing for the department and invited his attention to apprise the Court as to whether the notice as reflected in the said order was duly served upon the petitioner when ahead in time i.e. the date fixed for hearing of the said matter. The matter was adjourned in this regard.

4. The counsel for the Department upon taking instructions submits that the notice was in fact sent to the petitioner but the postal record received by the department would evince that the same was received after the date of the hearing so fixed.

5. Taking a clue from the aforesaid fact, the aforesaid revelation of the fact leads to an inescapable inference that the petitioner was not served with the notice fixing a date for the hearing and, therefore, could not get an adequate opportunity to defend.

6. We are conscious that the principles of natural justice is ingrained and inhered in any adjudicatory process when recognized as one of the facet of the constitutional ethos. The Constitution mandates that a person cannot be vexed nor be condemned unless he is provided inadequate opportunity to defend and in the event there appears to be violation of principles of natural justice based upon the legal maxim audi alteram partem, such order is susceptible to be interfered with. Though there has been a paradigm shift as every violation of the natural justice may not render the decision liable for an interference unless the prejudice is shown but what we find in the instant case is that if the adequate opportunity is not given and relevant documents are not produced which may clinch the issue, it would cause greater prejudice to the assesse. Solely on the ground that the order appears to have been passed without affording an adequate opportunity to defend as the notice was served upon the petitioner after the passing of the order, the Order-in-Original impugned in the instant writ petition i.e. dated 2^nd February, 2026 passed by the Joint Commissioner, GST & Central Excise Bhubaneswar Commissionerate, Bhubaneswar is hereby quashed and set aside. The matter is relegated to the authority to decide the same afresh after giving an adequate opportunity of hearing to the petitioner.

7. The learned counsel for the Department submits that the Court may fix a date as the petitioner is duly represented in the instant case so that there may not be any occasion to contend that the date so fixed by the authority could not be communicated to the Assessee- petitioner.

8. We, therefore, direct the authority to take up the aforesaid instant proceeding on 9^th April, 2026 at 11.00 A.M. when the petitioner shall remain present and it goes without saying that the petitioner shall not procrastinate the said proceeding but shall cooperate and assist the Officer in discharging his duties and deciding the case in an impartial manner.

9. Accordingly, the writ petition is allowed.