GST demand notice directed for adjudication after considering taxpayer’s reply and personal hearing opportunity

Case Summary: M/s. Sasmita Traders v. Superintendent, Bhubaneswar XI Range, Bhubaneswar & Another
High Court of Orissa at Cuttack
WP(C) No. 912 of 2025 | Order dated: 13.01.2025
Category: Demand Notice & Adjudication Procedure
Relevant Provisions: Section 73 and Section 75 of the CGST Act, 2017; Rule 142 of the CGST Rules, 2017

Facts (Para 1–2)

The petitioner, M/s. Sasmita Traders, challenged a demand notice issued in Form GST DRC-01 dated 26 November 2024 for the FY 2020-21, raising a demand of ₹35,99,303.
Counsel for the petitioner, Mrs. K. Sahoo, submitted that the entire disputed amount of ₹35,87,858 had already been paid on 18 January 2022, which was acknowledged by the department through a letter dated 18 September 2024. The balance difference of ₹11,000 had also been deposited. Despite this, the department issued the DRC-01 notice and scheduled a personal hearing.

The respondent revenue, represented by Mr. A. Kedia, contended that the petitioner should be directed to file a reply to the notice before the authority proceeds further.

Questions Before the Court

Whether the demand proceedings initiated under Form GST DRC-01 could continue when the taxpayer had already discharged the liability, and whether the department was required to consider the taxpayer’s reply and grant a personal hearing before adjudication.

Observations (Para 3)

The Bench observed that the taxpayer must be allowed an opportunity to reply within three weeks to the impugned notice. The adjudicating authority must consider such reply and decide the matter after granting a personal hearing, if deemed appropriate, in accordance with Section 75(4) of the CGST Act.

It was clarified that if the petitioner failed to file a reply within the prescribed time, the impugned demand shall stand restored, and a fresh hearing date may then be notified.

Judgment (Para 5)

The High Court disposed of the writ petition by directing the petitioner to file a reply to the DRC-01 notice by or before 7 February 2025, along with a certified copy of the Court’s order.
The authority shall thereafter adjudicate the matter on merits, considering the reply and ensuring procedural fairness.

This reflects judicial insistence on following natural justice principles before confirming any tax demand under GST.

Between Fine Lines (Practical Takeaway)

Taxpayers receiving a DRC-01 notice must respond promptly and ensure submission of proof of payment, if already made. The decision underscores that no demand should be finalized without due hearing, and even if payment is made earlier, formal adjudication is necessary for closure of proceedings.

Summary of Referred Case

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