GST Order by Successor Officer Without Fresh Hearing Violates Natural Justice: Delhi High Court in A.G. And Sons HUF Vs Union of India & Ors.
Introduction
A significant ruling has emerged from the Delhi High Court reinforcing the sanctity of procedural fairness in GST adjudication proceedings. The Court quashed a demand order passed by a successor Additional Commissioner who had stepped into the role after his predecessor had already conducted the personal hearing. The successor officer, without affording any fresh opportunity of hearing to the assessee, proceeded to pass the final Order-in-Original — a practice the Court found to be fundamentally at odds with constitutional guarantees and the well-established principles of natural justice.
This judgment carries far-reaching implications for GST adjudication across the country, particularly in situations where officer transfers disrupt ongoing proceedings.
Background and Facts of the Case
A.G. and Sons HUF ("the Petitioner") holds a majority stake in M/s AC Goel Tradelinks Pvt. Ltd. ("the Company"). In the course of investigation proceedings initiated by the Revenue authorities, a Show Cause Notice was issued against the Company alleging wrongful availment and utilisation of Input Tax Credit ("ITC"), raising a demand of Rs. 10.9 crore along with applicable interest and penalty. Simultaneously, an equivalent penalty was proposed against the Petitioner in its capacity as majority shareholder, invoking Section 122(1A) of the Central Goods and Services Tax Act, 2017 ("the CGST Act").
During the adjudication process, personal hearing was duly granted to the Petitioner by Mr. Sammer Kumar Jha, who was then serving as the Additional Commissioner. However, before any order could be issued, Mr. Sammer Kumar Jha was transferred out of the post. His successor, Mr. Debjit Banerjee, assumed charge of the position.
The Order-in-Original dated December 30, 2025 ("the Impugned Order"), confirming the ITC demand against the Company along with the proposed penalty against the Petitioner, was ultimately signed and passed by Mr. Debjit Banerjee — an officer who had neither personally heard the assessee nor presided over any part of the oral arguments.
Grounds Raised by the Petitioner
The Petitioner approached the Delhi High Court by way of a writ petition, raising the following substantive grievances:
Hearing conducted by one officer, order passed by another: The authority that signed the Impugned Order had no direct exposure to the hearing proceedings and had not heard any arguments advanced by the Petitioner.
Non-speaking and unreasoned order: The Impugned Order was alleged to be devoid of adequate reasoning and failed to engage meaningfully with the submissions placed on record.
Denial of cross-examination: The Petitioner was not afforded any opportunity to cross-examine the witnesses whose recorded statements were relied upon by the Department as evidence.
Jurisdictional infirmity under
Section 122(1A)of the CGST Act: The Petitioner contended that the conditions precedent for invokingSection 122(1A)were not satisfied, as the Petitioner is neither a taxable person under the CGST Act nor had it retained any benefit arising from the impugned transactions.Non-supply of seized documents: Several documents — seized by the Department during investigation and forming the basis of the demand — were not made available to the Company despite repeated written requests, thereby severely prejudicing its ability to mount an effective defence.
Revenue's Defence
The Department countered on two primary grounds:
- There is no statutory bar that prevents a successor officer from passing an order based on the notes of the final hearing recorded by his predecessor.
- The Petitioner had an efficacious alternate remedy by way of statutory appeal and therefore the writ petition was not maintainable.
Issues Framed by the Court
Whether an adjudication order passed by a successor officer — who had no occasion to personally hear the assessee — is legally sustainable, when the personal hearing had in fact been conducted by the predecessor officer prior to his transfer?