Assessment Order Quashed for Violation of Personal Hearing Mandate under GST

Case Title: M/s Xestion Advisor Private Limited v. Additional Commissioner Grade II & Another
Court: High Court of Judicature at Allahabad
Petition Number: Writ Tax No. 1462 of 2024 & Writ Tax No. 1468 of 2024
Category of Dispute: Natural Justice Violation – Opportunity of Personal Hearing
Date of Judgement: 09 April 2025
Relevant Sections: Section 74(9), Section 75(4) of the CGST Act, 2017
CGST Rules Involved: None directly discussed

Facts of the Case

[Para 3–5]

• M/s Xestion Advisor Pvt. Ltd., a company engaged in management consultancy, was issued a show cause notice (SCN) on 05.11.2020 in Form DRC-01 under Section 74 for non-filing of GSTR-3B.

• The SCN did not specify the date, time, or venue for personal hearing (marked “N.A.”).

• Without granting a hearing, the Deputy Commissioner passed an assessment order dated 18.11.2020, creating a tax demand of ₹2,83,984.

• The petitioner filed the GSTR-3B for July 2020 on 05.12.2020 (declaring NIL tax) and appealed. The appeal was rejected by the Additional Commissioner via order dated 12.06.2024.

Questions in Consideration

[Para 5, 8–9]

1. Whether the denial of opportunity of personal hearing before passing the assessment order amounts to violation of natural justice?

2. Whether the assessment order and the appellate order can be sustained in absence of compliance with Section 75(4) of the CGST Act?

Observations of the Court

[Para 7–9]

• The Court found that the SCN lacked any mention of a date, time, or venue for hearing, which is contrary to the principles laid down in Bharat Mint & Allied Chemicals v. Commissioner, Commercial Tax (2022) and Mahendra Educational Pvt. Ltd. v. State of U.P. (2024).

• The Court reaffirmed that opportunity of personal hearing is mandatory where any adverse order is contemplated, and such a right cannot be waived merely due to absence of a request by the assessee.

• Even minimal opportunity of hearing is essential when imposing heavy civil liabilities under GST laws.

Judgement of the Court

[Para 10–12]

• Both writ petitions were allowed.

• The assessment and appellate orders were quashed.

• The matter was remitted back to the Deputy Commissioner to issue a fresh notice within two weeks, and conduct proceedings afresh after granting a proper opportunity of hearing.

• Any deposit made during the pendency would be subject to the final outcome.

Between Fine Lines

• GST assessment orders passed without offering personal hearing violate natural justice.

• Mere issue of SCN without hearing particulars does not fulfil legal requirements.

• Adverse orders under Section 74 require mandatory compliance with Section 75(4).

• Such orders are liable to be quashed even if returns were later filed.

• Courts ensure procedural fairness is not compromised under the GST regime.

Summary of Referred Cases

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