The Uttarakhand High Court has set aside a GST assessment order raising a demand of ₹3.29 lakh after finding that the personal hearing afforded to the taxpayer was ineffective because it was scheduled before the opportunity to submit a reply had run its course.

The division bench of Chief Justice Manoj Kumar Gupta and Justice Subhash Upadhyay directed the assessing officer to resume proceedings from the show cause notice stage, allow the taxpayer to file his reply, and thereafter fix a date for personal hearing. The judgment was delivered on October 5, 2026.

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The petitioner has challenged the assessment order passed by the Deputy Commissioner, State Goods and Services Tax, Sector-2, Rudrapur, Uttarakhand.

The order, issued under Section 73(9) of the CGST Act/UKGST Act, raised a total demand of ₹3,29,206. This comprised tax of ₹1,73,120, interest of ₹1,36,086 and a penalty of ₹20,000.

The dispute centred on the procedure followed before the assessment order was passed. According to the petitioner, a show cause notice dated October 14, 2024, allowed him to submit his reply by November 11, 2024. The same notice fixed the personal hearing for November 11, 2024, at 3:33 p.m.

Although both entries carried the same calendar date, the judgment treated the hearing as having been fixed before the time allowed for submission of the reply had expired. The petitioner argued that this sequence deprived him of an effective opportunity to respond to the proposed demand.

The petitioner submitted that the personal hearing could not be fixed before the date prescribed for submission of the reply to the show cause notice. The procedure adopted by the department was contrary to the statutory scheme.

The petitioner also raised a separate objection concerning Rule 142(1A) of the GST Rules, 2017. He argued that the show cause notice and its summary had been issued without a preceding intimation, which, according to him, contravened that rule.

The court’s decision, however, rested on the ineffective personal hearing and the resulting breach of natural justice. The judgment did not separately determine the Rule 142(1A) objection.

The petitioner relied on the coordinate bench’s judgment in M/s Modine Thermal Systems Private Limited v. State of Uttarakhand and Others, Writ Petition (M/B) No. 123 of 2025.

The extract reproduced by the court explained that Sections 73, 74 and 75 must be read together to understand the procedure governing determination of tax liability.

In particular, Section 75(4) provides for an opportunity of hearing where the person chargeable with tax or penalty makes a written request, or where an adverse decision is contemplated against that person.

Section 75(5) permits the proper officer to grant time and adjourn the hearing where sufficient cause is shown, with reasons recorded in writing. The provision limits such adjournments to three during the proceedings.

The earlier ruling emphasised that authorities must follow the procedure prescribed by the statute when determining tax liability.

The bench recorded that the department was not in a position to dispute that fixing the personal hearing before the time for submitting the reply rendered the hearing ineffective and resulted in a breach of the principles of natural justice.

On that basis, the court held that the assessment order could not be sustained and quashed it.

The matter was remitted to the assessing officer with a specific direction to proceed from the show cause notice stage. The officer must first provide an opportunity to file a reply and then schedule the personal hearing.

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