Denial Of Personal Hearing Rights Before The Passing Of Adverse
Orders – Madras High Court Quashed The Order
1. Introduction
The
GST framework has ushered in a fully digital compliance environment, where
communications, show cause notices (SCNs), and orders are primarily uploaded on
the GST common portal. While this enhances efficiency and transparency, it has
also given rise to disputes about the sufficiency of service of notices
and the frequent denial of personal hearing rights before the passing of
adverse orders.
The
case of M/s Balaji Traders vs. Commercial Tax Officer & Ors. (W.P.
No. 28861 of 2025) before the Madras High Court is one such matter. The Court
quashed the assessment order passed against the petitioner because notices were
only uploaded on the GST portal, and no personal hearing was given
before confirming the demand. Importantly, the Court reiterated that mere
technical compliance of uploading notices cannot replace effective service
and directed reassessment subject to partial pre-deposit.
2. Case Details
- Case Name:
M/s Balaji Traders vs. Commercial Tax Officer & Ors.
- Court:
High Court of Judicature at Madras
- Coram:
Justice Krishnan Ramasamy
- Writ Petition No.:
28861 of 2025 with WMP Nos. 32376 & 32377 of 2025
- Date of Order:
05 August 2025
- Petitioner:
M/s Balaji Traders, Proprietorship concern represented by its sole
proprietor, Mrs. Sathya, Kallakurichi, Tamil Nadu
- Respondents:
1. Commercial
Tax Officer, Kallakurichi, Cuddalore, Tamil Nadu
2. State
Tax Officer, Office of the Assistant Commissioner (ST), Kallakurichi,
Cuddalore, Tamil Nadu
3. Deputy
Commissioner, Office of the Deputy Commissioner (ST), Kallakurichi, Tamil Nadu
4. Principal
Commissioner of CGST and Central Excise, Chennai
- Impugned Order:
Assessment order dated 12.08.2024 (Order No. 33FZKPS2391E1Z4/2019-20, Ref.
No. ZD3308240939367P) passed by the 2nd respondent
- Relief Sought:
Quashing of the impugned order and removal of recovery proceedings under
Section 79 of the TN-GST/CGST Act dated 25.06.2025
3. Factual Background
The
petitioner, M/s Balaji Traders, a sole proprietorship, was issued a show
cause notice (SCN) by the tax authorities for the financial year 2019–20.
According to the department, the petitioner had defaulted in filing correct
returns and had discrepancies in reported turnover and tax liability.
All
notices and communications, however, were uploaded only on the GST portal
under the “View Additional Notices and Orders” column. The petitioner
claimed they had no knowledge of these notices and hence did not file a reply.
Based
on this non-response, the 2nd respondent passed an ex parte assessment order
dated 12.08.2024 confirming the proposals in the SCN. Recovery proceedings
were also initiated under Section 79 of the GST Act by issuing a notice
dated 25.06.2025.
Aggrieved
by the order and the coercive recovery steps, the petitioner approached the
High Court.
4. Submissions by the Petitioner
Represented
by Ms. R. Reka, Advocate, the petitioner submitted:
1. Lack
of Knowledge of Notices
o All
SCNs and reminders were only uploaded in the GST portal.
o The
petitioner was unaware of these communications and therefore could not respond
in time.
2. No
Personal Hearing Granted
o The
assessment order was passed without providing a personal hearing, which
is a statutory requirement under Section 75(4) of the GST Act.
3. Offer
of Pre-Deposit
o To
demonstrate bona fides, the petitioner was willing to pay 25% of the
disputed tax as a pre-condition for remand.
4. Violation
of Natural Justice
o The
order was arbitrary and illegal as it violated principles of natural justice
and Articles 14 and 19(1)(g) of the Constitution.
5. Defence by the Respondents
Represented
by Ms. Amirtha Poonkodi Dinakaran, Government Advocate (for R1 to R3)
and Mr. Rajendran Raghavan, Senior Panel Counsel (for R4), the
respondents argued:
1. Notices
Duly Uploaded
o The
SCNs and other communications were duly uploaded on the GST portal, which is a
valid method of service under Section 169(1)(d) of the Act.
2. Admitted
No Personal Hearing
o The
respondents fairly admitted that no opportunity of hearing had been
granted before passing the impugned order.
3. Support
for Remand with Pre-Deposit
o Since
the petitioner was willing to deposit 25% of the disputed amount, the
respondents had no objection if the matter was remanded for fresh adjudication.
6. Observations of the Court
Justice
Krishnan Ramasamy made several significant observations:
1. Service
of Notice via Portal vs. Effective Service
o Uploading
notices in the GST portal is a legally valid service.
o However,
when a taxpayer does not respond despite repeated reminders, the officer should
not mechanically proceed to pass an ex parte order.
o Instead,
the officer must explore alternate modes of service under Section 169
(such as Registered Post with Acknowledgment Due – RPAD).
2. Personal
Hearing is Mandatory
o Section
75(4) of the GST Act requires a personal hearing before confirming proposals
adverse to the taxpayer.
o The
denial of this right makes the impugned order unsustainable.
3. Futility
of Ex Parte Orders
o Passing
ex parte orders without ensuring effective service is an “empty formality” that
creates unnecessary litigation, wasting the time of taxpayers, officers,
appellate forums, and courts.
4. Balancing
Revenue and Fairness
o Since
the petitioner offered to pay 25% of the disputed tax, remanding the matter
with this condition would balance both revenue protection and natural justice.
7. Final Judgment
The
High Court disposed of the writ petition with the following directions:
1. Impugned
Order Set Aside
o The
assessment order dated 12.08.2024 was quashed.
2. Matter
Remanded
o The
case was remanded to the respondent authority for fresh consideration.
3. Pre-Deposit
Condition
o The
petitioner must pay 25% of the disputed tax within four weeks of
receiving the Court’s order.
o The
setting aside of the order will take effect only after such payment.
4. Opportunity
for Reply & Hearing
o The
petitioner must file their reply with supporting documents within three weeks
from the date of deposit.
o The
respondent must thereafter issue a 14 days’ clear notice, fix a personal
hearing, and pass a fresh order on merits.
5. Disposal
of Writ Petition
o The
writ petition was disposed of with no costs, and connected miscellaneous
petitions were also closed.
8. Conclusion and Implications
The
Balaji Traders ruling once again underscores the importance of effective
communication and natural justice in GST proceedings.
Key
takeaways:
- Portal Upload Alone is Not Enough:
If the taxpayer does not respond, officers must use alternate statutory
modes to ensure notices actually reach the assessee.
- Mandatory Hearing:
Section 75(4) requires personal hearing before passing adverse
orders—denial makes the order invalid.
- Balance Between Justice and Revenue:
Courts are willing to remand matters if taxpayers show bona fides, such as
by making partial deposits.
- Judicial Trend:
This case aligns with other Madras High Court rulings (like Denasa
Buildcon, Royal Office Mart, Sindhu Enterprises)
stressing fairness over mechanical compliance.
For
businesses, this case serves as a reminder to regularly monitor the GST
portal and maintain compliance. For tax officers, it is a cautionary
message to avoid mechanical ex parte orders, which only increase
litigation and judicial burden.
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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