GST Demand Proceedings to be Conducted Separately for Each Year; Reasonable Opportunity of Hearing Granted

Issue: Whether the revenue authorities can issue a composite order covering multiple years in GST demand proceedings under Section 74, and whether the assessee should be granted a separate opportunity of hearing for each year.

Facts:

The assessee received a show cause notice under Section 74 of the GST Act for the period 2017-18 to 2023-24, proposing tax, interest, and penalty.
A personal hearing was scheduled for August 22, 2024, but the assessee filed a reply only on December 3, 2024.
The assessee expressed apprehension that the authorities were planning to issue a composite order covering all years without granting sufficient opportunity for the assessee to respond.

Decision:

The court acknowledged that the assessee was granted an opportunity for a personal hearing and that the authorities did not proceed until the assessee filed a reply.
However, considering the assessee’s apprehension about a composite order, the court directed the authorities to grant a reasonable opportunity of hearing for each year from 2018-19 onwards.
The court also directed the authorities to pass separate orders of determination for each year instead of issuing a composite order.

Key Takeaways:

This case highlights the importance of granting a fair and reasonable opportunity of hearing to assessees in GST demand proceedings, especially when multiple years are involved.
While a composite order covering multiple years may be convenient for the authorities, it can be prejudicial to the assessee if they are not given a proper chance to respond to the demands for each year separately.
The court’s decision ensures that the assessee’s rights are protected and that the assessment process is conducted fairly, allowing them to present their case for each year individually.

HIGH COURT OF KERALA

Lakshmi Mobile Accessories

Joint Commissioner (Intelligence & Enforcement)

Bechu Kurian Thomas, J.

WP(C) No. 2911 OF 2025

JANUARY 28, 2025

K.S.Hariharan Nair, G.Remadevi, Harima Hariharan, Rajath R Nath, Dheeraj Sasidharan and Sree Haridev, Advs. for the Petitioner. Jasmin M.M, GP for the Respondent.

ORDER

1. Petitioner challenges Ext.P1 show cause notice apart from seeking a direction to pass separate orders for the various financial years and also to grant sufficient time for furnishing a reply for financial years 20182019 to 2023-2024 and provide an opportunity for cross examination.

2. I have heard Sri.K.S.Hariharan Nair, the learned counsel for the petitioner as well as Smt.Jasmin M.M., the learned Government Pleader.

3. As per Ext.P1 show cause notice dated 29.07.2024 issued under Section 74 of the Central Goods and Services Tax Act, 2017; petitioner was called upon to answer the proposal for imposing tax, penalty and interest on account of the reasons mentioned therein. Though a personal hearing was scheduled to be held on 22.08.2024 as per Ext.P1, petitioner filed a detailed reply only on 03.12.2024, covering the entire period for which the show cause notice was issued.

4. Petitioner contended that the second respondent is proposing to issue a composite order for all the years and is proceeding in haste to complete the determination under Section 74 of the Act without granting sufficient opportunity to the petitioner. Though the petitioner contended that an opportunity for cross examination is not being granted and a composite order is proposed to be issued, there is nothing on record to assume that any procedure contrary to law would be adopted by the second respondent. The contention now raised are all assumptions of the petitioner, which cannot be taken into reckoning at this juncture. In this context, it needs to be noted that by Ext.P1 show cause notice petitioner was granted an opportunity to appear for personal hearing on 22.08.2024 and second respondent did not proceed further until petitioner chose to file a reply on 03.12.2024. Therefore, it cannot be stated that sufficient opportunity is not being granted.

5. Considering the fact that 05.02.2025 is the last date for passing orders under Section 74 of the Act in respect of 2017-2018, I am of the view that it is not proper for this Court to interfere in respect of the determination now sought to be done through Ext.P1 especially in relation to the aforesaid year. However, if an opportunity for cross examination is required by law and is not granted, the same is a matter to be considered at the appropriate stage by the appropriate authority. This Court cannot at this juncture assume that the apprehension of the petitioner is legally justified, especially in the absence of any material.

6. However taking note of the apprehension of the petitioner that a composite order will be issued by the second respondent, I am of the view that, insofar as years 2018-2019 onwards are concerned, the petitioner ought to be granted a reasonable opportunity of hearing since the limitation does not expire in the immediate future. In this context, the observation of a learned single Judge in W.P.(C) No.35156/2024 that separate adjudication orders ought to be issued not withstanding a composite show cause notice is apposite to be borne in mind. I am in accord with the said conclusion.

7. Hence, liberty is granted to the competent amongst the respondents to pass appropriate orders for 2017-18, pursuant to Ext.P1 show cause notice within the period of limitation, in accordance with law, after granting an opportunity of hearing. Thereafter the Authority will be at liberty to pass separate orders of determination for each of the years mentioned in the show cause notice, after granting reasonable opportunity of hearing to the petitioner, in accordance with law. The writ petition is disposed of.