A Personal Hearing is a Mandatory Right, Separate From a Written Reply.

A Personal Hearing is a Mandatory Right, Separate From a Written Reply.

Issue

Whether a GST assessment order is legally valid if it is passed without granting the assessee an opportunity for a personal (oral) hearing, especially when the show-cause notice itself fails to specify a date, time, and venue for such a hearing.

Facts

• The assessee was issued show-cause notices and a reminder under Section 73 of the UPGST Act.
• In these notices, the columns for specifying the date, time, and venue for a personal hearing were marked as “N.A.” (Not Applicable).
• The assessing authority proceeded to pass an adverse order against the assessee without conducting an oral hearing.
• The assessee challenged the order, arguing it was passed in violation of the principles of natural justice and statutory mandates.

Decision

• The High Court quashed the assessment order, deeming it unsustainable in law.
• It held that marking the hearing details as “N.A.” in the notice effectively denied the assessee their statutory right to a personal hearing from the outset.
• The court clarified that the opportunity to file a written reply and the right to a personal hearing are two distinct, cumulative, and mandatory requirements. They are not alternatives.
• Citing Section 75(4) of the UPGST Act, it was emphasized that a personal hearing is compulsory before any adverse order is passed, even if the assessee fails to submit a written reply.
• The matter was remanded back to the authority for fresh proceedings, which must include a proper opportunity for an oral hearing.

Key Takeaways

• Two Pillars of Natural Justice: In GST proceedings, taxpayers have two separate rights: the right to submit a written defense and the right to be heard orally. Fulfilling one does not absolve the authority from offering the other.
• Hearing is Non-Negotiable: An oral hearing is not optional or dependent on the assessee’s request if an adverse order is contemplated. The authority must grant it.
• Defective Notice: A show-cause notice that fails to provide details for a hearing or marks it as “N.A.” is procedurally flawed and can be a ground for quashing the final order.
• No Waiver by Silence: An assessee’s failure to file a written reply does not automatically waive their right to a personal hearing. The two rights are independent.