HC Quashes GST Assessment Order as Personal Hearing Was Fixed Before Reply Deadline:

The Uttarakhand High Court quashed a GST assessment order passed under Section 73 of the CGST Act after finding that the personal hearing was fixed before the expiry of the time granted for filing a reply to the show cause notice. The Division Bench comprising Chief Justice Manoj Kumar Gupta and Justice Subhash Upadhyay held that such a hearing was merely illusory and violated the prescribed procedure.

The petitioner, M/s Star Medical Stor, challenged the assessment order dated 21.08.2024 and the underlying show cause notice issued under Section 73 of the GST Act. It was contended that the department had fixed the date of personal hearing even before the last date available to the petitioner for submitting its reply to the show cause notice, thereby depriving it of an effective opportunity to present its case.

Before the High Court, the petitioner argued that the action of the department was contrary to the principles of natural justice. Reliance was placed on an earlier decision of the Court in M/s Abuturrab Agencies v. The Commissioner, State Tax and another, where a similar procedural lapse had been examined.

Significantly, the State's counsel fairly conceded that the date fixed for personal hearing was 18 days prior to the last date prescribed for filing the reply and that the opportunity of hearing granted to the petitioner was not in accordance with the prescribed procedure.

“Since date for personal hearing was fixed 18 days prior to the last date fixed for filing of the reply, the hearing presumably offered was illusory, and not in conformity with the procedure prescribed.”

Taking note of the admitted procedural defect, the High Court held that the assessment order could not be sustained. The Bench observed that an effective opportunity of hearing necessarily requires that the assessee be allowed to submit its reply before the personal hearing takes place.

Thus, the Court quashed the assessment order and remitted the matter back to the Adjudicating Authority for fresh consideration from the stage of the show cause notice.

The Court directed the Adjudicating Officer to proceed afresh after fixing a proper date for personal hearing and providing the petitioner an effective opportunity to present its case.

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