The Madras High Court has held that even if reply to notice is filed belatedly (after the due date specified in the notice), the adjudicating authority is bound to grant a hearing after receipt of the reply, if he chooses to confirm the demand, being unsatisfied with the reply. Section 75(4) of the CGST Act.
The bench of Justice C. Saravanan while terming the action as manifest violation of principles of natural justice, observed that Section 75(4) of the GST Acts mandates that an opportunity of hearing must be provided when an adverse decision is contemplated or when requested in writing by the assessee.
The department had issued a show cause notice (SCN) in Form DRC-01 on November 27, 2024, raising three issues against the petitioner, Tvl.Sri Vigneshwara Trading. While the petitioner accepted one discrepancy and paid the corresponding tax, it contested the finding of excess ITC claim, arguing that it had correctly availed credit in compliance with Sections 16(2)(c), 17(1), and 17(2) of the GST Acts and Rules 42 and 43.
G.Natarajan, the counsel for the petitioner contended that as per these provisions, ITC can only be restricted to taxable supplies used for business, and appropriate apportionment had been done. However, the department claimed that the GSTR-09 return showed no such apportionment, leading to disallowance of part of the ITC.
The department argued that the petitioner had not requested a hearing after submitting the reply and therefore could not claim violation of procedure.
The High Court quashed the order only concerning the second defect (excess ITC claim) and remitted the matter back to the Assistant Commissioner for fresh adjudication. The officer has been directed to complete the proceedings within three months of receiving the order and to grant the petitioner an effective personal hearing.
The court also cautioned that if the petitioner fails to appear in the de novo proceedings, the officer would be at liberty to reconfirm the earlier order.
The Court set aside a Goods and Services Tax (GST) demand order issued against Tvl. Sri Vigneshwara Trading, observing that the Assistant Commissioner (ST), Avarampalayam Circle, Coimbatore, failed to grant the assessee a mandatory personal hearing before passing the adverse order.
Case Details
Case Title: Tvl.Sri Vigneshwara Trading Versus Assistant Commissioner (ST) (FAC)
Case No.: W.P. No. 37084 of 2025
Date: 06.10.2025
Counsel For Petitioner: G.Natarajan
Counsel For Respondent: Prashantha Kiran Government Advocate
, the adjudicating authority is bound to grant a hearing after receipt of the reply, if he chooses to confirm the demand, being unsatisfied with the reply. Section 75(4) of the CGST Act.){kind=link}