Another Systematic Failure was observed by the Court where the GST order u/s 74 was passed without giving the opportunity of hearing

The petitioner is engaged in manufacture and supply of potato flakes besides other items. A show cause notice dated 03.08.2024 for the period July 2017 to March 2018, proposing to classify the product in question i.e. potato flakes under tariff heading 2005-2000 instead of 1105-2000 was issued. In the notice, date by which the reply was required to be submitted was indicated as 19.08.2024 and in column pertaining to date of personal hearing ‘NA’ was indicated and the same was the position pertaining to column pertaining to time of personal hearing.

A reply to the notice dated 03.08.2024 was filed by the petitioner through counsel on 19.08.2024 contesting the allegations made therein. In the reply, a specific prayer was made on behalf of the petitioner that no adverse order to the prejudice of the petitioner be passed without affording him an opportunity of hearing.

However, by the order impugned dated 04.02.2025, without affording any opportunity of hearing, the demand has been created.

The main issue here is whether the impugned order dated 04.02.2025 is liable to be quashed for violation of Section 75(4) of the CGST Act, 2017, due to the denial of opportunity of personal hearing.

No justification was there with the state for the denial of hearing under Section 75(4).

As per court, the impugned order dated 04.02.2025 was held to be in gross violation of Section 75(4) of the CGST Act, Principles of natural justice and Binding High Court precedent in Laskin Engineering Pvt. Ltd. v. State of U.P. (Writ Tax No. 674 of 2024).

The Court noted a systemic failure, observing that officers were mechanically denying hearings, setting conflicting dates, and ignoring electronic records and specific hearing requests.

Court finally allowed the writ, imposing a cost of Rs. 20,000/- on the Joint Commissioner SGST to be deposited with the High Court Legal Services Committee within four weeks.