GST assessment and bank attachment quashed as order passed without personal hearing was held violative of natural justice

Case Title: Sri Chakkra Cabinets v. Commercial Tax Officer & Others
Court: Madras High Court
Petition No.: W.P. No. 6250 of 2025
Date of Judgment: 24 February 2025
Relevant Section: Section 73 of the CGST Act, 2017
Category of Dispute: Natural Justice – GST Assessment and Bank Account Attachment

Facts (Paras 2–4):

The petitioner, Sri Chakkra Cabinets, challenged the assessment order dated 28.08.2024 passed under Section 73 of the CGST Act in Form DRC-07, and the consequential freezing of its bank account by the State Bank of India. The petitioner contended that although a reply to the show cause notice dated 22.05.2024 was filed through its tax consultant on 20.06.2024, no personal hearing was granted, nor any communication was made regarding the rejection of the reply. Later, on 04.01.2025, the petitioner learned that the order had been passed and uploaded on the GST portal, without any physical service. Recovery proceedings had also commenced, resulting in a debit of ₹3,25,320 from the petitioner’s account.

Questions for Determination (Para 2):

Whether the assessment order passed under Section 73 of the CGST Act without granting personal hearing or proper service of notice is valid in law, and whether consequent bank attachment can be sustained.

Observations (Paras 5–6):

The Court observed that the show cause notice and reminder were issued only on the GST portal under the “Additional Notice” tab, and that the personal hearing notice did not specify date, time, or venue. The petitioner’s consultant had replied to the notice, but no further communication was received from the Department. The impugned order was neither served physically nor properly intimated electronically before recovery was initiated.
Justice Ramasamy held that such omission constituted a clear violation of the principles of natural justice, as the petitioner was deprived of an opportunity to make a detailed representation or appear personally.

Judgment (Para 6.1–7):

The Court set aside the assessment order dated 28.08.2024 and remanded the matter to the assessing authority for fresh consideration. The petitioner was directed to file a detailed reply with documents within three weeks, and the authority was directed to issue a 14-day notice for personal hearing and pass a reasoned order thereafter.
The Court further held that since the assessment order was quashed, the bank attachment automatically ceases to exist, and directed the Department to issue directions to de-freeze the bank account immediately.

Between Fine Lines (Practical Takeaway):

The judgment underscores that uploading notices and orders solely on the GST portal without proper personal hearing or effective service is legally insufficient. Taxpayers must be given a fair chance to respond before any recovery or coercive action. Departments must strictly comply with Section 73(9) and Rule 142 of the CGST Rules, ensuring due process before confirming tax demands or freezing accounts.

Table – Key Cases Referred and Outcome

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