Personal Hearing Is Not an Option, It's a Right under GST Law –
Madras High Court
Summary of
the Case
The Madras High Court
quashed the assessment orders passed against Laxmi Rolling and Strips Pvt. Ltd.
for the financial years 2017–18 to 2022–23. The Court held that failure to
provide a personal hearing under Section 75(4) of the CGST/TNGST Act, 2017,
violated the principles of natural justice. Even though the taxpayer submitted
a detailed reply (130 pages), the final order was passed without affording them
an opportunity to be heard.
· Laxmi
Rolling and Strips Pvt. Ltd. v. State Tax Officer (Intelligence)
·
Court:
High Court of Judicature at Madras
·
Order Nos.:
W.P.Nos.37428, 37434, 37432, 37411 & 37420 of 2024
Date of Judgment: 10.07.2025
Brief Facts
of the Case
- The petitioner received show cause
notices dated 22.07.2024 for six financial years from 2017–18 to
2022–23.
- A detailed 130-page reply was
submitted on 19.09.2024, including legal arguments and factual
clarification.
- The department based its assessment
on electricity consumption data and sample test inspection,
asserting that production exceeded declared turnover.
- The impugned order dated 26.09.2024
was passed, alleging:
- Taxpayer did not address
calculations based on energy consumption.
- Petitioner may be operating from unregistered
premises or purchasing materials without tax invoices.
- The authority invoked Section
122(1A) and levied penalty under Section 74 of the CGST/TNGST
Act.
- The petitioner contended that no personal
hearing was granted prior to the final order, despite detailed reply.
Submissions
by the Petitioner
Counsel: Mr. P. Raj
Kumar, for Mr. Adithya Reddy
- The petitioner argued that:
- A personal hearing is
mandatory under Section 75(4).
- The final order was passed without
examining the reply in detail or confronting the petitioner with
adverse findings.
- The penalty and assessment were
finalized without a hearing, violating natural justice.
- Sought quashing of the impugned
order and a fresh opportunity to be heard on merits.
Submissions
by the Respondent
Counsel: Mr. C. Harsha
Raj, Special Government Pleader (Tax)
- Claimed that opportunity of
hearing was granted on three dates:
- 23.08.2024
- 30.08.2024
- 11.09.2024
- Argued that the petitioner cannot
claim lack of opportunity when multiple hearing dates were offered.
Court’s
Analysis and Findings
- On examining the records and
arguments, the Court found:
- The detailed 130-page reply
was filed by the petitioner, showing intent to contest the proceedings
seriously.
- There was no clear evidence
that an effective personal hearing took place or that the contentions
were duly considered.
- The Court emphasized:
“As per Section 75(4) of
the CGST Act, it is mandatory to grant an opportunity of hearing, especially
when the assessee has made a detailed representation.”
- The Court further held that:
- Even if hearing dates were fixed, not
conducting the hearing effectively and not recording the outcome renders
the proceeding invalid.
- The impugned orders were thus passed
in violation of natural justice.
Judgment
and Directions
The Hon’ble Court passed
the following order:
1. The
impugned assessment orders dated 26.09.2024 are set aside.
2. The
matter is remanded back to the assessing officer for fresh
adjudication.
3. The
petitioner shall:
o File
a reply along with all supporting documents within 2 weeks.
4. The
respondent shall:
o Issue
a clear 14-day notice for personal hearing.
o Pass
a fresh speaking order after considering all submissions
and in accordance with law.
No costs
were awarded. Connected miscellaneous petitions were closed.
Conclusion
This judgment reaffirms
the mandatory nature of personal hearing under Section 75(4) and
stresses that GST authorities must act fairly by giving due opportunity to the
taxpayer before imposing taxes and penalties. It is not enough to merely
schedule a hearing, but the authority must actively engage with the
taxpayer's reply and record a reasoned order.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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