IMPORTANT GST RULING ON PERSONAL HEARING UNDER SECTION 75(4)
The Gujarat High Court in Komal Jayeshbhai Hemavat v. State Tax Officer 185 taxmann.com 856 has delivered a significant judgment reinforcing the sanctity of natural justice in GST adjudication proceedings.
Key Takeaway
Even if the taxpayer selects "NO" for personal hearing in Form DRC-06, the department cannot bypass the mandatory requirement of granting hearing opportunities before passing an adverse order under Section 74.
Facts of the Case
- Search proceedings were conducted and books were seized.
- Show Cause Notice in Form DRC-01 was issued.
- Assessee filed reply in Form DRC-06 and selected "NO" against personal hearing.
- Department proceeded to pass an adverse order under Section 74 without granting any hearing.
The assessee challenged the order before the Gujarat High Court on grounds of violation of principles of natural justice.
What the High Court Held
The Court categorically observed that:
- Section 75(4) mandates grant of personal hearing before passing an adverse order.
- Procedural selection of "NO" in DRC-06 cannot override a statutory safeguard.
- Adjudicating authorities are duty bound to provide adequate opportunity of hearing irrespective of such selection.
- Failure to grant hearing vitiates the entire adjudication process.
The Court therefore quashed the order and remanded the matter back for fresh adjudication.
Why This Judgment Is Important
This ruling is extremely relevant in the present GST litigation because many assessment orders are being passed mechanically on the basis of:
- non-response,
- portal defaults,
- inadvertent procedural selections,
- or technical non-compliances.
The judgment reiterates that:
Natural justice is not a mere procedural formality, it is a substantive statutory right.
Important Observation
The Court also relied upon the doctrine of Audi Alteram Partem, no person should be condemned unheard, emphasizing that fairness in adjudication is fundamental to tax administration.
A very useful precedent for GST practitioners dealing with ex parte orders and denial of hearing matters.
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