The Allahabad High Court has held that the GST reply deadline and personal hearing cannot be on the same date and the practice must be discontinued.
The bench of Justice Vikas Budhwar has set aside a GST adjudication order and an appellate order in a dispute involving input tax credit of ₹6.63 lakh after finding that the taxpayer’s deadline for replying to the show cause notice coincided with the date fixed for personal hearing.
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The bench remitted the matter to the adjudicating authority for a fresh decision after permitting the taxpayer to submit a reply and attend a hearing. The relief was conditional on the petitioner depositing ₹5,000 as costs to the respondents by November 13, 2026.
The Court clarified that it had not decided the merits of the input tax credit dispute. It also expressly stated that the order, passed with the consent of the parties, would not be treated as a precedent.
The petitioner, a partnership firm engaged in the mentha oil business, stated that it purchased goods from M/s Vishnu Traders on January 18, 2021, for a taxable value of ₹55,26,000.
On this purchase, the firm availed central GST credit of ₹3,31,560 and state GST credit of ₹3,31,560, aggregating to ₹6,63,120.
According to the petitioner’s account recorded in the order, the supplier’s GST registration was subsequently cancelled suo motu with effect from April 9, 2021.
The Deputy Commissioner, State Tax, Sector-1, Budaun, issued an intimation in Form GST DRC-01A dated September 8, 2021, requiring objections by September 14, 2021. The proposed disallowance of input tax credit invoked Section 16(2)(c) of the GST legislation.
The petitioner stated that it submitted a reply to this intimation. A show cause notice under Section 73 followed on October 26, 2021, to which the firm also claimed to have replied.
The October 26, 2021 notice fixed November 10, 2021 both as the deadline for submitting a reply and as the date of personal hearing.
The adjudicating authority subsequently passed an order under Section 73 on January 4, 2022.
The petitioner claimed that it became aware of the adjudication order only in December 2025. It filed an appeal on January 3, 2026, which the Additional Commissioner Grade-II (Appeals-I), State Tax, Bareilly, rejected on April 30, 2026, on the ground of delay.
The firm approached the High Court challenging both the original order and the appellate rejection.
The petitioner argued that the proceedings were procedurally defective because the deadline for responding to the show cause notice and the personal hearing had been scheduled for the same date.
It relied on the Allahabad High Court’s Division Bench ruling in M/s Mahaveer Trading Company v. Deputy Commissioner, State Tax and another, decided on March 4, 2024, concerning the proper sequence of submitting a reply and conducting a personal hearing.
The petitioner further argued that the doctrine of merger would not apply because its appeal had been dismissed for delay. Although it had not filed a separate delay condonation application, it urged the Court to exercise its extraordinary jurisdiction under Article 226 in the circumstances of the case.
The Revenue opposed the petition, submitting that the taxpayer had not actively participated before the adjudicating authority and had not filed a delay condonation application in appeal.
The bench identified the central issue as whether the deadline for replying to a show cause notice could be the same as the date of personal hearing.
The Court held that the issue stood covered by Mahaveer Trading Company. The passage reproduced from that decision disapproved of scheduling personal hearing on the same date as the reply deadline and required the reply date to precede the hearing.
Applying that ruling, the Court found that the irregularity had arisen at that stage of the proceedings itself.
During the hearing, the petitioner agreed to accept a condition for having the matter remitted to the original authority. The Revenue’s Standing Counsel did not object to remand but requested that the Court issue time-bound directions.
The High Court set aside the adjudication order under Section 73 and the April 30, 2026 appellate order under Section 107 rejecting the appeal for delay.
It remitted the matter to the Deputy Commissioner, State Tax, Sector-1, Budaun, for fresh adjudication.
Since the petitioner was already aware of the show cause notice and the allegations against it, the Court directed the firm to submit its reply by November 18, 2026.
The adjudicating authority was directed to fix a hearing in the second week of December 2026 and thereafter pass an order strictly in accordance with law without delay.
The Court made the benefit of this relief conditional upon the petitioner depositing ₹5,000 as costs to the respondents through the usual applicable method by November 13, 2026.
The order provides the taxpayer with a fresh opportunity to contest the proposed disallowance. It does not finally allow the disputed input tax credit or decide the consequences of the supplier’s registration cancellation.
The Court expressly directed the adjudicating authority to decide the matter independently, without being influenced by observations made in the writ order.
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