No Hearing, No Order: Bombay HC Strikes Down GST Adjudication

The writ petition was made challenging an order of adjudication made under Section 73 of the GST Act for the year 2021-22. The case showed that a notice was served on the assessee, but the order was made without affording an opportunity of hearing as envisaged under Section 75(4). It was contended that although replies had been filed to the proceedings, no personal hearing was scheduled or communicated before confirming the demand. It was further pointed out that statutory appeal remedies were unavailable in substance, since the core grievance was the denial of opportunity at the stage of adjudication. These facts, the petition asked for quashing of the order on the grounds of breach of statutory mandate as well as violation of natural justice principles.

Issue Raised: Whether the direction dated 28.03.2024 under Section 73 for AY 2021-22 could be maintained when no personal hearing as mandated under Section 75(4) was given.

HC’s Ruling: The Court held that the order passed under Section 73 on 28.03.2024 for AY 2021-22 was unsustainable, as the adjudicating authority had not complied with the mandate of Section 75(4). It was emphasised that when an adverse order is proposed, the statute obliges the authority to give an effective opportunity of hearing. The record and the statement of the State confirmed that no such hearing was granted. The Court reaffirmed that natural justice is a fundamental component of tax law adjudication, and violation of this renders the proceedings invalid and a nullity. It was further noted that once the cancellation of registration was done and the petitioner lacked adequate access to notices, the withholding of the hearing became even more important.

The Court set aside and quashed the impugned order under Section 73 in respect of AY 2021-22. The case was recalled back to the authority for passing a judgment with an instruction to have fresh consideration, strictly in terms of law and to grant personal hearing as required under Section 75(4). The Court explained that it had not taken any view on the merit of the demand and that all arguments were reserved for consideration in the new proceedings. The petitions were granted, rule was made absolute, and no order as to costs was made.

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