High Court Quashes Appellate Order; Fresh Hearing Directed in GST Demand Proceedings

The petitioner challenged an Order-in-Appeal which confirmed a demand arising from an Order-in-Original for the Financial Year 2019-20; the petition also impugned Notification No.56/2023 (Central Tax) dated 28/12/2023. The petition formed part of a batch of matters in which the validity of Notification Nos. 9 and 56/2023 was being litigated and the question was recorded as sub judice (pending) before the Supreme Court in S.L.P. No. 4240/2025.

The petitioner’s primary factual grievance was procedural: a personal hearing notice was system-generated on 10/06/2025, fixing a hearing for 11/06/2025, i.e., after the impugned OIA and that notice referred to earlier personal hearing dates of 19/12/2024, 09/01/2025 and 10/02/2025 and carried a remark indicating issuance due to a “SYSTEM REQUIREMENT”. On merits, the demand was alleged to have been raised on account of a difference between output sales and inputs of about Rs. 9.16 crores, treated as value addition and giving rise to a cash tax liability of approximately Rs. 1.10 crores.

Main Issue: Whether the impugned Order-in-Appeal could be sustained where (a) a notice of personal hearing was generated after the date of the appellate order, and (b) the petitioner’s effective opportunity of hearing was in question, all in the backdrop of the broader challenge to Notification No. 56/2023, which is pending before the Supreme Court.

Apex Court’s Decision: The Respondent produced copies of earlier personal hearing notices fixing dates in December 2024, January 2025 and February 2025 and explained that those notices had not been uploaded on the portal at the relevant time; a later portal upload generated a further personal hearing notice, producing the apparent anomaly. The Court noted that the petitioner had not appeared on any of the recorded dates. While the department’s explanation pointed to a technical glitch in the portal, the Court observed that, in other connected matters where Notification No.56/2023 is challenged, the practice had been to afford petitioners an opportunity to be heard or to remit matters for fresh adjudication.

Therefore, the impugned Order-in-Appeal is set aside. The petitioner is permitted to appear before the Appellate Authority and is allowed to file any documents or affidavits and make submissions; notice of a personal hearing shall be granted to the petitioner. After hearing the petitioner, the appeal shall be adjudicated on the merits, and a reasoned order shall be passed. The said adjudication shall remain subject to the outcome of the Supreme Court proceedings concerning Notification No.56/2023. Writ petition and pending applications are disposed of in the above terms.

To Read Full Judgment, Download PDF Given Below