GST Authority Must provide hearing opportunity before passing an adverse order even if not demanded

 

Here is an interesting case by Allahabad High Court which has held that GST Authority Must Provide hearing opportunity before passing an adverse order even if not demanded. There are a lot of cases where an adverse order is passed even without discussing it with the taxpayers. The judgement would be relevant in all such cases.

The case citation is as under:

B.L. Pahariya  Medical Store

V. State of U.P

[2023] 153 taxmann.com 659 (Allahabad)

 

Let us have a short overview of the case for the benefit of readers:

 

Facts of the case:

 

 In this particular case, the petitioner challenged an order passed by the Deputy Commissioner, which imposed a substantial demand of around Rs. 26 Lacs on the petitioner. The argument put forth was that the petitioner was not provided with proper opportunity of hearing before passing adverse order.

Ruling by the Hon’ble High Court:

The Honourable High Court emphasized that, in accordance with Section 75 of the CGST Act, 2017, the Assessing Authority is obligated to provide the assessee with a chance for a personal hearing before making an adverse assessment order. Furthermore, even in situations where an assessment order leads to significant civil liability, it is essential to provide the assessee with at least a basic opportunity to be heard.

The Court also took note of a similar case, Bharat Mint & Allied Chemicals v. Commissioner Commercial Tax, where it was established that a person or assessee is not obligated to formally request a “personal hearing opportunity.” It is incumbent upon the Assessing Authority to grant such an opportunity before issuing an adverse order. As a result, the Court concluded by allowing the petition and set aside the impugned order.