The Uttarakhand High Court has quashed a GST assessment order passed under Section 73 of the CGST Act after finding that the adjudicating authority fixed the date of personal hearing before the expiry of the time granted to the taxpayer for filing its reply to the show cause notice.

The Bench of Chief Justice Manoj Kumar Gupta and Justice Subhash Upadhyay has observed that the date of personal hearing was fixed before the last date of submission of the reply to the show cause notice, and, therefore, the procedure adopted was wholly illegal.

The petitioner challenged the show cause notice issued in Form GST DRC-01 dated May 22, 2024, as well as the consequential order passed in Form GST DRC-07 dated August 21, 2024. The taxpayer contended that although an opportunity of personal hearing had been granted, the hearing was scheduled before the last date available for filing a reply to the show cause notice, thereby depriving it of a meaningful opportunity to present its defence.

During the proceedings, the petitioner relied upon an earlier decision of the High Court in M/s Abuturrab Agencies v. The Commissioner, State Tax and Another, wherein a similar procedural defect had been considered. The taxpayer argued that fixing the hearing date before the expiry of the reply period defeated the very purpose of adjudication and violated the statutory scheme governing GST proceedings.

The department conceded that the personal hearing had indeed been scheduled 18 days prior to the last date fixed for filing the reply. It was acknowledged that the opportunity of hearing offered in such circumstances could not be regarded as a genuine or effective hearing and was not in conformity with the prescribed procedure.

The High Court observed that the hearing provided to the taxpayer was merely illusory and failed to satisfy the requirements of natural justice. Consequently, the Court quashed the assessment order and remitted the matter back to the adjudicating authority for fresh consideration.

The Court directed the adjudicating officer to proceed afresh from the stage of the show cause notice and to fix a fresh date of personal hearing after providing the taxpayer a proper opportunity to submit its reply and supporting documents.

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