GST Demand Notice Invalidated for Lack of Personal Hearing Date

Summary in Key Points:

Issue: Whether a show cause notice (SCN) under Section 74 of the GST Act is valid when it does not specify a date for a personal hearing.
Facts: The assessee challenged a demand notice issued under Section 74, pointing out that the notice did not mention a date for a personal hearing, despite stating that the assessee was entitled to one.
Decision: The High Court held that the SCN was invalid due to the omission of the personal hearing date, which violated the principles of natural justice. The court extended the time for the assessee to file a reply and directed the authorities to grant a personal hearing if requested.

Decision:

The High Court ruled in favor of the assessee, setting aside the impugned demand notice. The court emphasized the following:

Violation of Natural Justice: The omission of the date for a personal hearing in the SCN violated the principles of natural justice, as it deprived the assessee of the opportunity to adequately prepare and present their case.
Right to be Heard: The assessee has a right to be heard, and the SCN must clearly specify the date and time for the personal hearing to facilitate this right.
Extension of Time: The court extended the time for the assessee to file a reply to the SCN, ensuring that they have sufficient opportunity to respond to the demand.
Personal Hearing: The court directed the authorities to grant a personal hearing to the assessee if they request one, ensuring that their right to be heard is upheld.

Important Note: This case highlights the importance of adhering to procedural requirements and ensuring fairness in GST proceedings. The High Court’s decision emphasizes that SCNs must clearly specify the date and time for personal hearings to allow assessees to exercise their right to be heard. This decision safeguards the principles of natural justice and ensures transparency and due process in GST assessments.

HIGH COURT OF ORISSA

Sarat Shradha Infrastructure (P.) Ltd.

Chief Commissioner of CT and GST, Odisha

Arindam Sinha and M.S. Sahoo, JJ.

W.P.(C) No. 29570 of 2024

NOVEMBER 30, 2024

Ms. I. Tripathy, Adv. for the Petitioner. S. Das, ASC for the Respondent.

ORDER

1. Ms. Tripathy, learned advocates appear on behalf of petitioner. Ms. Tripathy submits, under challenge is demand notice dated 17^th February, 2021 issued by the Sales Tax Officer pertaining to financial year 2018-19 issued under section 74 of Odisha Goods and Services Tax Act, 2017. She draws attention to show cause notice dated 17^th February, 2021 to point out, in it there was direction to file reply as well as for personal hearing on dates and times mentioned in the table. Referring to the table she demonstrates, only date of filing show cause was given. Date for personal hearing was not given. It amounted to violation of principles of natural justice. On query made she submits, reply to the show cause could not be submitted because of the pandemic.

2. Mr. Das, learned advocate, Additional Standing Counsel appears on behalf of revenue and submits, a reminder was also given to file reply. It was presumed, on filing reply there may arise necessity of personal hearing, if at all. Otherwise, omission to file reply would mean the assessee has no defence to the demand. He relies on subsection (4) in section 75.

3. Petitioner is relying on directions given in the show cause notice. It was in respect of a demand. Any defect in the show cause notice would cause violation of principles of natural justice. On query made Mr. Das in fairness submits, time be extended for petitioner to file reply and thereafter in event personal hearing is sought, it will be given.

4. In view of aforesaid, impugned demand is set aside and quashed. Petitioner has two weeks from date to file reply to the show cause. In event it does file reply, in it request may be made for personal hearing or separately thereafter. In event the reply is not filed as directed, impugned order will stand automatically restored.

5. The writ petition is disposed of.