The Uttarakhand High Court has set aside an adjudication order passed under Section 73 of the Uttarakhand Goods and Services Tax (UKGST) Act after finding that the tax authorities failed to provide the taxpayer with a personal hearing after receiving his reply to the show cause notice.
Holding that the omission amounted to a violation of the mandatory requirement under Section 75(4) of the UKGST Act, the bench of Chief Justice Manoj Kumar Gupta and Justice Subhash Upadhyay directed the department to conduct fresh adjudication after granting the petitioner an opportunity of hearing.
The dispute arose from a Show Cause Notice (GST DRC-01) issued to the petitioner on 8 May 2025 under Section 73 of the UKGST Act. The notice required the petitioner to submit his reply by 8 June 2025. However, no reply was filed within the stipulated period.
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Subsequently, the department issued a reminder on 27 August 2025, fixing 10 September 2025 as the date for personal hearing. The petitioner again failed to submit a reply. Thereafter, a second reminder dated 14 November 2025 was issued. In response, the petitioner finally filed a detailed reply along with supporting documentary evidence on 28 November 2025.
Despite receiving the written reply and documents, the Proper Officer proceeded to pass the Order-in-Original dated 9 December 2025 rejecting the petitioner’s explanation and confirming the tax demand, without fixing any further date for personal hearing. Aggrieved by this action, the petitioner approached the High Court seeking quashing of both the adjudication order and the show cause proceedings.
The petitioner argued that although the taxpayer had eventually submitted a comprehensive reply with supporting evidence, the department failed to provide any opportunity of personal hearing thereafter.
It was submitted that once a reply is received, the adjudicating authority is required to hear the taxpayer before taking an adverse decision. Passing the final order immediately after receiving the reply, without scheduling a hearing, violated the principles of natural justice as well as the statutory mandate under Section 75(4) of the UKGST Act.
During the hearing, the State’s Standing Counsel did not dispute the factual position that no personal hearing had been fixed after the petitioner submitted his reply on 28 November 2025.
The Court also noted that the impugned adjudication order itself contained no indication that any hearing had been granted after receipt of the reply. This omission became decisive in the Court’s determination.
The Bench held that the adjudication process suffered from a clear procedural illegality because the statutory requirement under Section 75(4) had not been complied with.
The Court observed that once the taxpayer had filed a reply to the show cause notice, the adjudicating authority ought to have fixed a date for personal hearing before deciding the matter. Since no such hearing was afforded, the order stood vitiated for violating the statutory mandate and the principles of natural justice.
The High Court quashed the Order-in-Original and remitted the matter back to the Proper Officer.
The Court directed the adjudicating authority to pass a fresh order only after providing the petitioner with an effective opportunity of personal hearing in accordance with law. It also disposed of the pending application, if any.Â
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