Allahabad HC Sets Aside GST Appeal Enhancement for Lack of Notice; Orders De Novo Hearing

Gurunanak Enterprises approached the High Court challenging the enhancement order passed by the first appellate authority under Section 107 of the GST Act. The central grievance was that the authority had increased the tax liability during the appeal without issuing any prior notice or allowing the petitioner to respond. The Court had specifically asked State and Union counsel to clarify whether such notice had ever been served.

Main Issue: Whether the appellate authority could enhance the tax liability under Section 107(11) of the GST Act without issuing a mandatory show-cause notice to the assessee.

HC’s Verdict: The High Court noted the categorical admission from the respondents that no notice or opportunity was granted before enhancing the levy. Once such a concession was made, the Court held that keeping the writ petition pending would serve no purpose. The absence of notice was a clear violation of the statutory safeguards under Section 107(11) and a breach of natural justice.

Thus, the Court quashed the enhancement order. The matter was remanded to the first appellate authority to conduct a de novo hearing. The authority must issue proper notice within 15 days, the petitioner must file a reply within 21 days thereafter, and a fresh order must be passed within one month, strictly in accordance with the law.

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