Defective Show Cause Notice Quashed: Opportunity Granted to File Reply

Case Title: M/s. Sarat Shradha Infrastructure Pvt. Ltd. v. The Chief Commissioner of CT & GST, Odisha and Others
Court: High Court of Orissa at Cuttack
Petition No.: W.P.(C) No. 29570 of 2024
Date of Judgement: 30.11.2024
Category of Dispute: Input Tax Credit / Demand under Section 74
Relevant Sections: Section 74, Section 75(4) of OGST Act, 2017; Principles of Natural Justice

Facts of the Case

• The Sales Tax Officer issued a demand notice dated 17.02.2021 under Section 74 of the OGST Act, 2017 for FY 2018–19 (Para 1).

• The show cause notice (SCN) directed filing of reply and mentioned hearing but did not specify date/time for personal hearing (Para 1).

• Petitioner could not file reply due to pandemic restrictions (Para 1).

Questions in Consideration

• Whether a demand order issued on the basis of a defective SCN, which failed to specify date/time for personal hearing, violates principles of natural justice? (Para 1–2).

• Whether omission to reply to SCN automatically amounts to absence of defense? (Para 2).

Observations of the Court

• The SCN itself contained defects since it did not provide opportunity for a personal hearing, which is mandatory in a demand proceeding (Para 3).

• A defective SCN causes violation of principles of natural justice (Para 3).

• The Court noted that Section 75(4) OGST Act mandates grant of personal hearing if requested (Para 2–3).

• Revenue fairly submitted that time may be extended to allow reply and personal hearing (Para 3).

Judgement of the Court

• The impugned demand notice was set aside and quashed (Para 4).

• Petitioner directed to file reply within two weeks (Para 4).

• If reply is filed, petitioner may request for personal hearing, which must be granted (Para 4).

• If reply is not filed within the time granted, the impugned order will stand restored automatically (Para 4).

• Writ petition disposed of (Para 5).

Between Fine Lines (Simplified Summary in 5 Points)

1. A defective show cause notice without a specified hearing date violates natural justice.

2. The taxpayer could not reply due to the pandemic.

3. Court recognized that Section 75(4) requires personal hearing.

4. Demand notice was quashed and fresh opportunity granted.

5. If taxpayer fails to respond now, the demand order revives automatically.

Summary of Referred Cases

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