Natural Justice Breaching: Allahabad High Court Invalidates GST Order for Lack of Proper Hearing

The Allahabad High Court quashed a GST order against the company for violating natural justice, as no proper hearing opportunity was given prior to issuing the order. The petitioner gets three weeks to reply; authorities must grant a hearing, pass a fresh order, and lift prior attachments.

Good Brick Field has filed a writ petition in the Allahabad High Court, challenging an order dated July 11, 2024, passed under Section 73(9) of the U.P. GST Act 2017. The case pertains to the tax period 2019-20.

During the hearing, the petitioner claimed that he was not given a proper opportunity to present his case, which is a clear violation of the principles of natural justice. Moreover, the date scheduled for the personal hearing was the same as the date fixed for furnishing a reply to the show cause notice (SCN). The petitioner cited a ruling of the Division Bench of this Court in Writ Tax No. 303 of 2024 (Mahaveer Trading Company vs. Deputy Commissioner, State Tax, and Another), which ruled that granting a personal hearing is an obligatory requirement under GST law, especially when an adverse decision is likely.

When the court heard the arguments from both sides, it noted that these facts were not disputed. It highlighted that following natural justice is essential, and no exception can be made. Before taking any final decision, tax authorities are required to give a proper notice and adequate opportunity to be heard. Without this, the order becomes legally invalid.

Considering the same, the court quashed the impugned order dated July 11, 2024, and directed the petitioner to consider the impugned order final. The petitioner has been granted a time period of three weeks to submit a detailed reply to the notice, including all legal and factual arguments.

The adjudicating authority must thereafter provide the petitioner at least 15 days’ notice before fixing a new date for the personal hearing. After hearing the matter, a fresh and reasoned order must be passed. Additionally, the tax authorities have removed any bank account or property attachments made based on the earlier order, permitting the petitioner to resume normal operations.