GST Demand Quashed by Punjab & Haryana HC: Personal Hearing Cannot Precede SCN Reply Deadline

Introduction to the Dispute

In a significant ruling that reinforces the fundamental principles of natural justice within the indirect tax regime, the Punjab and Haryana High Court has struck down a GST demand order. The judicial intervention in the case of Balwinder Sood And Sons Vs State of Punjab And Others serves as a critical reminder to revenue authorities that statutory procedures cannot be reduced to mere mechanical exercises. The core issue revolved around the sequencing of adjudicatory events—specifically, whether the tax department can legally conduct a personal hearing before the deadline granted to the assessee for submitting a written reply to a Show Cause Notice (SCN) has expired.

The High Court unequivocally established that granting a personal hearing is not an empty formality. For the adjudicatory process to be legally sound, the assessee must first be allowed to present their defense in writing, which then forms the foundation for any subsequent oral arguments.

Factual Matrix of the Case

The sequence of events that led to the filing of the writ petitions, specifically referring to the facts extracted from CWP-20120-2026, highlights a glaring procedural lapse by the adjudicating authorities: