Allahabad High Court quashes Rs. 145 Crore GST Demand for Unfair Hearing

Allahabad High Court, Lucknow Bench Cancels Rs 145 Crore GST Demand Due to Unfair Hearing and Errors by Authorities. because the tax authorities did not allow a fair hearing and ended up issuing a conflicting decision. So, the Court sent the case back, telling officials to give the Federation a real chance to present their side.

Fact of the Case

The Federation went to the High Court, contesting a GST order where the tax department had slapped them with demands for tax, interest, and penalties altogether adding up to Rs 1,45,56,94,578 under Section 74(9) of the GST Act, 2017. The Federation said the demand was wrong. The problem started when they accidentally filed GST returns (GSTR-1) under the wrong category, leading to the inflated tax bill.

Issue

The key issue was whether the order from the tax department held up, considering it was contradictory and the Federation never got a real chance to explain itself.

Court Observation

When the High Court looked closer, it caught something off. The tax authorities claimed the Federation argued its case at a hearing on 07.11.2025, and supported that with a written submission dated 25.11.2025. But that does not make sense  the written submission came after the hearing, so it could not have been used at that time. The Court saw this as clear proof that officials had not paid enough attention. Plus, after filing their written reply, the Federation didn’t get another shot at a hearing. The Court also pointed out the tax demand was mostly caused by a technical error in the GST return, which hardly justified the massive penalty.

Judgement

The High Court  cancelled the GST order. They said the authorities had to give the Federation a fair hearing before making any final call. The Court sent the case back, telling the department to let the Federation present its arguments properly. And, just to be clear, the Court added that the Federation has to cooperate and wrap up their arguments on the scheduled date  no dragging things out with extra adjournments.