Demand Order Quashed for Lack of Personal Hearing; Violation of Natural Justice

Demand Order Quashed for Lack of Personal Hearing; Violation of Natural Justice

Issue: Whether a demand order under Section 73(9) of the Maharashtra GST Act, 2017 is valid when the assessee was not granted a personal hearing as required under Section 75(4).

Facts:

• The assessee challenged a demand order imposing a tax liability of Rs. 8,20,740/-.
• The assessee argued that they were not granted an opportunity for a personal hearing as mandated by Section 75(4).
• The revenue’s notices did not specify a date or time for a personal hearing.

Decision:

• The court held that even if the assessee did not file a reply, the authorities cannot dispense with the mandatory requirement of granting a hearing opportunity under Section 75(4).
• Following the precedent in Kloud Data Labs (P.) Ltd., the court quashed the impugned demand order.
• The matter was remanded to the authorities to grant a proper hearing opportunity to the assessee.
• The writ petition was allowed.

Key Takeaways:

• This case underscores the importance of adhering to the principles of natural justice in GST proceedings.
• Section 75(4) mandates that a personal hearing must be granted if requested by the assessee or if an adverse decision is contemplated.
• The absence of a specified date and time for a hearing in the notice constitutes a denial of a reasonable opportunity.
• Even in cases where the assessee does not file a reply, the authorities are obligated to provide a personal hearing if required.
• This decision protects assessees from arbitrary demand orders and ensures that they are given a fair opportunity to present their case.