The Goods and Services Tax Appellate Tribunal (GSTAT), Prayagraj Bench, has delivered a split opinion on whether tax adjudication and appellate orders passed after the scheduled hearing dates, without notifying a further date, violate the principles of natural justice.
The disagreement arose in an appea against a demand of approximately ₹9.06 lakh, comprising tax, interest and penalty, relating to input tax credit claimed on purchases from an allegedly non-existent supplier.
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Judicial Member Mahtab Ahmad favoured setting aside the orders and remanding the matter for fresh adjudication. Technical Member Ashish Varma disagreed that the orders were invalid merely because they were issued after the hearing dates and proposed deciding the dispute on its merits.
In a joint reference dated October 23, 2026, the members referred the appeal to the Vice President, GSTAT, Uttar Pradesh, for assignment to a larger bench. The reference means that neither member’s proposed outcome constitutes a final disposal of the appeal.
The taxpayer, engaged in trading iron, steel and hardware goods in Pratapgarh, Uttar Pradesh, had claimed input tax credit in its November 2018 GSTR-3B return on two purchases of TMT bars from M/s Agarwal Brothers, Allahabad.
Invoice No. 158, dated November 29, 2018, involved a taxable value of approximately ₹11.03 lakh and combined CGST and SGST of ₹1,98,628.70. Invoice No. 148, dated November 18, 2018, involved a taxable value of approximately ₹10.85 lakh and combined tax of around ₹1.95 lakh.
The taxpayer maintained that it had voluntarily reversed the credit relating to Invoice No. 158 through its August 2019 GSTR-3B return because the transaction had not appeared in GSTR-2A. For the other transaction, it relied on its asserted reflection in GSTR-2A and supporting purchase documents.
The department subsequently received information from its headquarters that the supplier was non-existent and had obtained registration to pass on credit through invoices and e-way bills without actual supplies. On that basis, proceedings were initiated under Section 74 of the GST legislation, alleging wrongful availment and utilisation of ITC through collusion with the supplier.
The adjudication order dated March 19, 2020, raised a total demand of ₹9,05,962. The first appellate authority upheld the demand through an order dated July 11, 2022.
The central procedural dispute concerned the dates on which the authorities issued their decisions.
The show-cause notice fixed March 16, 2020, for both submission of the reply and personal hearing. The taxpayer submitted its written reply on that date and selected “No” against the option for personal hearing in Form GST DRC-06. The adjudicating officer passed the order three days later, on March 19, 2020.
At the first appellate stage, the hearing was fixed for May 23, 2022. The taxpayer neither appeared nor sought an adjournment. The appellate authority dismissed the appeal on July 11, 2022, without notifying another date.
The taxpayer argued that issuing the orders on subsequent, unnotified dates violated natural justice and the law laid down by the Allahabad High Court.
Judicial Member Mahtab Ahmad accepted the objection concerning the unnotified decision dates.
His opinion relied on Allahabad High Court decisions, including Prayaas Trading Corporation, Subham Steel Traders, Videocon D2H and Aroma Chemicals. He understood those decisions to require an authority proceeding ex parte either to pass its order on the date fixed or to fix and communicate another date.
The Judicial Member reasoned that notifying a subsequent date preserves an opportunity for the absent party to approach the authority, explain the absence and seek a further hearing before the decision is issued. Passing an order later without communicating that date deprives the party of that procedural opportunity.
On this reasoning, he considered both the adjudication order and the first appellate order contrary to natural justice. His proposed disposition was to set aside both orders and remit the matter to the proper officer for a fresh decision after providing an appropriate opportunity of hearing.
He declined to conclusively decide the disputed factual questions concerning the ITC claim, observing that findings on those matters could prejudice the taxpayer in fresh proceedings. SAHU BUILDING MATERIAL
Technical Member Ashish Varma disagreed with the conclusion that the orders were invalid merely because they were signed or pronounced after the hearing dates.
He distinguished the precedents on their facts and emphasised that the taxpayer’s written defence was already on record before the adjudicating officer. The taxpayer had also expressly declined a personal hearing.
In his view, the three-day interval between the written reply and the original order represented time taken to examine the record. At the appellate stage, the memorandum of appeal already contained the taxpayer’s factual and legal objections.
Invoking the “no prejudice” doctrine, the Technical Member reasoned that procedural deviations should invalidate an order only where actual prejudice is established. He found that no fact or argument had been shown to have been lost because the authorities issued their orders later.
He also referred to Section 160(1), which protects proceedings from invalidation merely because of a mistake, defect or omission where they otherwise conform in substance and effect to the legislation.
His opinion noted that the Allahabad High Court had itself taken up the practical and legal difficulties surrounding orders passed after hearing dates in Neha Enterprises. He also recorded that the related Sun Glass Works ruling was under challenge before the Supreme Court, without interim protection, as described in the opinion. SAHU BUILDING MATERIAL
Despite their disagreement on the consequences of the decision dates, both members considered the first appellate order deficient under Section 107(12).
That provision requires an appellate order to state the points for determination, the decisions on those points and the reasons supporting the decisions.
The Judicial Member observed that the appellate authority had effectively dismissed the appeal because the taxpayer did not appear, even though the memorandum of appeal and accompanying documents placed specific challenges to the assessment before it. An ex parte decision still required consideration of the available material and a reasoned conclusion.
The Technical Member agreed that the order was too brief to satisfy the statutory requirement. However, he considered that the Tribunal could decide the merits itself because the complete record was available and both parties had been heard.
In their subsequent joint reference, the members expressly agreed that a deficiency in the reasons of the first appellate order would not, by itself, require remand where the Tribunal possessed all material necessary to decide the dispute fairly and effectively. The remaining disagreement concerned the effect of the orders being passed on later, unnotified dates.
The Technical Member separately examined the merits and proposed treating the invoices differently.
For Invoice No. 148, he considered that the taxpayer had failed to establish actual receipt of goods and fulfilment of the conditions for ITC. His opinion identified an unexplained difference between the invoice number relied upon and the entry appearing in GSTR-2A.
He also reasoned that an entry in GSTR-2A showed that a supplier had uploaded the transaction; it did not independently establish receipt of goods or payment of tax to the government. Similarly, e-way bills generated by the disputed supplier did not independently prove actual movement or receipt.
He therefore proposed confirming tax of ₹1,95,268, an equal penalty and applicable interest within the show-cause notice.
For Invoice No. 158, however, he accepted that the taxpayer had reversed credit of ₹1,98,628.70 before the departmental inquiry. Although the reversal had been entered under IGST instead of CGST and SGST, he regarded it as a curable, revenue-neutral error because the aggregate credit balance had been reduced.
He accordingly proposed dropping the tax and penalty demand for that invoice, while leaving any interest liability to be determined under Section 50(3) and Rule 88B.
These conclusions form part of the Technical Member’s dissenting opinion and are not a final determination of the appeal.
The joint reference invokes Rule 50 of the GSTAT (Procedure) Rules, 2025, read with the relevant provisions governing the President and members’ service conditions.
The question referred is whether the facts of this appeal can be distinguished from the Allahabad High Court precedents concerning orders passed after fixed hearing dates without further notice. The reference also records the Technical Member’s reliance on absence of prejudice, practical difficulties faced by adjudicating authorities and pending judicial consideration of the issue.
The larger bench will determine the appropriate course—whether to decide the appeal on merits or remit it for fresh adjudication, disregarding the existing merits findings.
The case thus places before the larger bench a significant procedural question: when a taxpayer has filed a written defence but does not attend the scheduled hearing, must the GST authority notify a further date before issuing its decision?
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