Denial of Personal Hearing Vitiates GST Order, HC Clarifies

This case examines the tension between digital procedural formalities and the fundamental principles of natural justice within the GST framework. The dispute arose when a taxpayer was issued an adverse final order without a personal hearing, despite having filed a detailed defense following a search and seizure action. The tax department justified this omission by pointing to the taxpayer’s selection of “No” in the personal hearing column of the digital Form DRC-06. However, the petitioner argued that statutory safeguards under Section 75(4) of the GST Act mandate a hearing whenever an adverse order is intended, regardless of a technical checkbox. Ultimately, the case highlights the legal consensus that a digital technicality cannot override the mandatory requirement to provide a taxpayer the opportunity to be heard before a tax demand or penalty is imposed.

Central Issue: Whether an assessment order remains valid when no personal hearing is granted despite the taxpayer opting out in the reply?

HC’s Decision: The High Court’s ruling reinforces the supremacy of statutory law over digital procedural formalities, establishing that a taxpayer’s right to a fair hearing is non-negotiable. By quashing an adverse order passed without a personal appearance, the Court clarified that Section 75(4) of the GST Act is a mandatory provision that cannot be bypassed by a “No” selection on a digital form.

The judgement emphasises that tax authorities have an inherent duty to uphold the principles of natural justice, specifically the rule of audi alteram partem, ensuring that no individual is penalized without being heard. By remanding the case for fresh adjudication, the Court signaled that procedural fairness is a prerequisite for a valid order, serving as a critical safeguard against mechanical or automated justice in an increasingly digital administrative landscape.

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