The Bombay High Court has reaffirmed that principles of natural justice are statutorily embedded in Section 75(4) of the Central Goods and Services Tax Act, 2017, mandating an opportunity of hearing before any adverse order is passed. This judgment clarifies that procedural compliance is non-negotiable, even where taxpayers fail to respond to notices, and sets a precedent for remanding cases where due process is violated.
Background & Facts
The Dispute
The petitioner, Akash Atmaramji Narnaware, challenged an order passed by the State Tax Officer, Dhantoli under the CGST Act, 2017. The dispute centered on the assessment of tax liability for the period July 2017 to March 2018, where the petitioner alleged that no opportunity of hearing was granted before the adverse order was passed.
Procedural History
The case progressed through the following stages:
- 2021: Notices issued under the GST Act, but no date, time, or venue for personal hearing was provided
- 13 July 2022: Impugned order passed without affording an opportunity of hearing
- 2024: The Court’s earlier judgment in Kloud Data Labs Pvt. Ltd. v. Deputy Commissioner of State Tax, Nagpur established the legal principle
- 2026: Present writ petition filed challenging the 2022 order
Relief Sought
The petitioner sought:
- Quashing of the impugned order dated 13 July 2022
- Remand of the matter to the respondent for fresh consideration with due compliance of Section 75(4) of the CGST Act
The Legal Issue
The central question was whether the State Tax Officer could pass an adverse order under the CGST Act, 2017 without providing a written opportunity of hearing, as mandated by Section 75(4), particularly when no personal hearing was scheduled despite notices being issued.
Arguments Presented
For the Petitioner
The petitioner contended that:
- Section 75(4) of the CGST Act explicitly requires an opportunity of hearing before any adverse decision is taken
- The notices issued in 2021 and 2022 failed to specify a date, time, or venue for a personal hearing, rendering them procedurally deficient
- The precedent in Kloud Data Labs Pvt. Ltd. v. Deputy Commissioner of State Tax supported the argument that non-compliance with Section 75(4) vitiates the order
For the Respondent
The Assistant Government Pleader argued:
- The petitioner had failed to respond to the notices, implying waiver of the right to a hearing
- An appeal under Section 107 of the CGST Act was available to the petitioner, providing an alternative remedy
- The matter could be reconsidered afresh, as the respondent was willing to comply with the legal requirements
The Court's Analysis
The Court relied on its earlier judgment in Kloud Data Labs Pvt. Ltd. v. Deputy Commissioner of State Tax to hold that Section 75(4) of the CGST Act is a mandatory provision embodying the principles of natural justice. The Court observed:
"The provision of Section 75(4) of the GST Act 2017 categorically demonstrates that the principles of natural justice were inbuilt in the statutory provisions itself and mandate an opportunity of hearing, either (1) where a request in writing is received from the person chargeable with tax or penalty or (2) where any adverse decision is contemplated against such person."
The Court further noted that the notices issued to the petitioner did not comply with the statutory requirement, as they neither provided a date for hearing nor indicated that a hearing was applicable. The Court rejected the respondent’s argument that the availability of an appeal under Section 107 could cure the procedural defect, emphasizing that compliance with natural justice is a precondition for passing any adverse order.
The Verdict
The writ petition was partly allowed. The Court:
- Quashed and set aside the impugned order dated 13 July 2022
- Remanded the matter to the State Tax Officer for fresh consideration in accordance with law
- Directed the petitioner to appear before the respondent on 4 March 2026
What This Means For Similar Cases
Opportunity of Hearing Is Non-Negotiable
The judgment reinforces that Section 75(4) of the CGST Act is not a mere formality but a mandatory procedural safeguard. Practitioners must:
- Ensure that notices issued under the GST Act explicitly provide for an opportunity of hearing, including date, time, and venue
- Challenge orders passed without compliance with Section 75(4), as such orders are liable to be set aside
- Argue that the availability of an appeal under Section 107 does not cure the defect of non-compliance with natural justice
Procedural Compliance Trumps Substantive Defenses
The Court’s ruling clarifies that:
- Tax authorities cannot rely on the taxpayer’s failure to respond to notices as a ground to bypass the opportunity of hearing
- Even where no written request for a hearing is made, the authorities must provide an opportunity if an adverse decision is contemplated
- The burden lies on the tax authorities to demonstrate compliance with Section 75(4) before passing any adverse order
Remand Is the Default Remedy for Non-Compliance
For practitioners handling similar cases:
- Courts are likely to remand matters to the authorities for fresh consideration where Section 75(4) is violated
- The judgment provides a strong precedent to argue for the quashing of orders passed without due process
- Taxpayers can seek relief even if they failed to respond to earlier notices, as the onus of compliance lies with the authorities
