Gujarat HC: Statutory Mandate of Personal Hearing Under Section 75(4) CGST Act Cannot Be Waived by Assessee's Option in Reply to Show Cause Notice

Overview

A significant ruling has emerged from the Gujarat High Court reinforcing the inviolable nature of procedural safeguards embedded in GST adjudication proceedings. In Komal Jayeshbhai Hemavat v. State Tax Officer (4) & Anr., the Court categorically held that the statutory obligation to grant a personal hearing under Section 75(4) of the Central Goods and Services Tax Act, 2017 cannot be bypassed merely on the ground that the assessee ticked "No" against the personal hearing option while filing a reply to the show cause notice. The ruling carries far-reaching implications for adjudicating authorities across the country and reaffirms the supremacy of legislative mandates over procedural conduct of parties.

Background and Facts of the Case

The matter arose when Komal Jayeshbhai Hemavat (hereinafter referred to as "the Petitioner"), a registered assessee under the Gujarat Goods and Services Tax Act, 2017, had their business premises subjected to a raid, following which books of accounts were seized by the tax authorities.

Subsequently, a show cause notice dated September 21, 2023 was issued in Form GST DRC-01, calling upon the Petitioner to explain the alleged tax liability. The Petitioner duly responded by filing a reply on November 21, 2023. However, crucially, while submitting this reply through Form DRC-06, the Petitioner had selected "NO" against the column seeking consent for a personal hearing.

Acting on this selection, the State Tax Officer & Anr. (hereinafter referred to as "the Respondent") proceeded to pass a final assessment order under Section 74 of the GST Act dated December 30, 2023, without affording any opportunity of personal hearing to the Petitioner prior to the said adverse order.

Aggrieved by this order, the Petitioner approached the Gujarat High Court by way of a writ petition in R/Special Civil Application No. 6209 of 2024, challenging the order on the ground that it was passed in contravention of Section 75(4) of the CGST Act, 2017 and violated the foundational principles of natural justice.

Rival Contentions

Petitioner's Submissions

  • The assessment order dated December 30, 2023 was passed without granting any personal hearing, in clear violation of the mandate under Section 75(4) of the CGST Act.
  • The failure to hear the Petitioner before passing an adverse order constituted a breach of the principles of natural justice, specifically the doctrine of audi alteram partem.
  • The impugned order was therefore legally unsustainable and liable to be quashed.

Respondent's Submissions

  • The Petitioner had voluntarily opted against a personal hearing by selecting "NO" in Form DRC-06 filed on November 21, 2023.
  • Since the assessee itself had chosen not to avail a hearing, the authorities were not obligated to provide one, and the order was passed in accordance with the stated preference of the Petitioner.