GST orders quashed and remanded due to SCN upload in wrong tab and denied hearing, as opportunity of hearing

GST orders quashed and remanded due to SCN upload in wrong tab and denied hearing, as opportunity of hearing and proper notice service are mandatory.

Issue:

Whether an assessment order passed under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), and a subsequent appellate order upholding it, are valid if the assessee was not granted an opportunity of hearing and the notice for hearing was improperly uploaded on the ‘additional tab’ of the GST portal, which the assessee could not access or became aware of, thus violating principles of natural justice.

Facts:

• The revenue passed an assessment order against the assessee under Section 74 of the CGST/UPGST Act, 2017 (which deals with demands involving fraud, misstatement, or suppression).
• The assessee contended that no opportunity of hearing was granted to them.
• The assessee further alleged that the notice regarding the hearing was uploaded on the ‘additional tab’ of the GST portal, which, in their view, could not be termed as proper service of notice.
• The appellate authority subsequently dismissed the assessee’s appeal, upholding the assessment order.

Decision:

The court held in favor of the assessee, allowing the writ petition. It ruled that an opportunity of hearing is mandatory under Section 75(4) of the CGST Act, and proper service of notice is an essential requirement of natural justice. Consequently, both the impugned assessment order dated October 31, 2023, and the appellate order dated December 24, 2024, were quashed. The matter was remanded to the assessing authority for passing a fresh order after giving a proper opportunity of hearing to the assessee.

Key Takeaways:

• Mandatory Opportunity of Hearing (Section 75(4)): Section 75(4) of the CGST Act explicitly mandates that “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.”¹ This provision underscores the statutory requirement for a hearing.
• Proper Service of Notice – Cornerstone of Natural Justice: The judgment re-affirms that effective and proper service of notice is not just a procedural formality but an “essential requirement of natural justice.” Uploading a notice on an “additional tab” that is not routinely checked or clearly brought to the assessee’s attention, and which leads to the assessee being unaware of the proceedings, is not considered proper service.
• Consequences of Violation of Natural Justice: Any order passed without affording a proper opportunity of hearing, particularly when effective notice was not served, is deemed procedurally invalid and a violation of the fundamental principle of audi alteram partem (hear the other side).
• Quashing Both Assessment and Appellate Orders: When the initial assessment order is fundamentally flawed due to a violation of natural justice, the subsequent appellate order that upholds it also becomes unsustainable, even if the appellate authority itself did not commit a procedural error. The root cause of the invalidity lies in the primary adjudication.
• Remand for Fresh Adjudication: The typical remedy for such procedural violations is to quash the impugned orders and remand the matter back to the original authority (assessing authority) with specific directions to proceed afresh after providing a proper opportunity of hearing to the assessee. This ensures that the merits of the demand can be decided after due process.
• Section 74 Context: Even in cases involving allegations of fraud, misstatement, or suppression (under Section 74), the procedural safeguards of natural justice, particularly the right to notice and hearing, remain paramount and cannot be bypassed.