Decoding the Procedural Flaws in GST Adjudication: How Flawed Hearing Timelines Invalidate Tax Demands Under Section 75(4)
The implementation of the Goods and Services Tax (GST) regime ushered in a digital-first approach to tax administration, heavily relying on automated portals and standardized forms. However, the foundational pillars of natural justice—specifically the right to a fair and meaningful hearing—cannot be bypassed by digital convenience or administrative haste. A recurring procedural anomaly has plagued the GST adjudication landscape: revenue authorities frequently schedule personal hearings before the deadline to submit a written reply, schedule both events on the exact same day, or entirely deny a hearing because the assessee selected "No" on a digital form.
A robust and consistent body of jurisprudence from various High Courts has systematically dismantled these flawed practices. Judicial forums have repeatedly clarified that such procedural missteps strike at the very core of Section 75(4) of the CGST Act, 2017, rendering the subsequent assessment orders legally void. This comprehensive analysis explores the critical intersections of statutory mandates, procedural fairness, and recent judicial pronouncements governing the timing and necessity of personal hearings in GST adjudication and refund proceedings.
The Statutory Bedrock: Understanding Section 75(4)
To appreciate the judicial pushback against procedural shortcuts, one must first examine the explicit language of the governing statute. The legislative intent regarding the right to be heard is enshrined in Section 75(4) of the CGST Act, 2017, which states:
"An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person."
A careful reading of this provision reveals two distinct, independent triggers for a mandatory personal hearing, separated by the crucial disjunctive word "or":
- When the assessee explicitly submits a written request for a hearing.
- When the adjudicating authority intends to pass an adverse order against the assessee.
The overwhelming majority of litigation stems from the second limb of this provision. Revenue officers often operate under the misconception that a hearing is a privilege granted only upon request, ignoring the statutory obligation that an anticipated adverse decision automatically triggers the requirement for a personal hearing, irrespective of the assessee's procedural requests.
The "No" Checkbox Fallacy: Is a Hearing Mandatory Despite Portal Selections?
One of the most frequent disputes arises when an assessee inadvertently or intentionally selects "No" in the personal hearing dropdown menu of Form GST DRC-06. Tax authorities have routinely used this digital selection as a waiver of the assessee's right to natural justice, proceeding to pass adverse orders without further engagement. High Courts across the country have categorically rejected this approach.
The Foundational Precedent
The judicial correction of this practice began decisively with the Allahabad High Court's landmark intervention in Bharat Mint and Allied Chemicals vs Commissioner of Commercial-tax. The Court delivered an unambiguous interpretation of the law, establishing that the statutory mandate of the second limb of Section 75(4) operates independently of the assessee's actions. If the department contemplates an adverse decision, it is legally bound to offer a hearing. The Court dismissed the revenue's reliance on inapplicable precedents, quashed the impugned order, imposed costs of Rs. 10,000, and mandated that the Commissioner of Commercial Tax, U.P., circulate the ruling to all field formations to ensure strict compliance.