Case Summary

Case Title: M/s Jupiter Exports v. Commissioner of GST
Court: High Court of Delhi
Petition No.: W.P.(C) 6673/2021 & CM Appl. 21011/2021
Date of Judgment: 24 July 2023
Statutory Provisions: Section 74(9), Section 75(4) & 75(5) of CGST Act, 2017
Category: Adjudication – Violation of Natural Justice / Opportunity of Hearing
Source: Court judgment

Facts of the Case (with para references)

The petitioner challenged a demand order dated 25.03.2021 issued under Section 74(9) of the CGST Act raising a demand of ₹6.67 crore for FY 2018–19, alleging fraudulent ITC based on supplies from non-existent entities (Para 1–2).

The petitioner asserted that no personal hearing was provided despite a written request dated 24.03.2021 seeking such hearing (Para 15). The order was passed the very next day, ignoring multiple documents such as purchase invoices, GSTR-1, GSTR-2A, BRCs, and bank statements relied on by the petitioner (Para 28).

The Department claimed the visit of representatives and telephone conversations with the proprietor constituted a “personal hearing” (Para 15–21).

Questions / Issues for Determination

1. Whether the impugned order under Section 74(9) is vitiated for non-grant of a mandatory personal hearing under Section 75(4) of the CGST Act?

2. Whether telephonic conversations or office visits can legally substitute a statutory personal hearing?

3. Whether the writ petition is maintainable despite the availability of an appellate remedy?

Court’s Observations (with para references)

The Court noted that the statute itself mandates personal hearing whenever adverse action is contemplated or when requested in writing (Section 75(4)). The Department had not denied the petitioner’s assertion of absence of a personal hearing, as no counter-affidavit was filed despite repeated opportunities (Para 12).

The Court rejected the Department’s reliance on telephonic discussions, holding that brief telephone calls cannot substitute a meaningful personal hearing (Para 20–22). This was reinforced through reliance on BA Continuum India Pvt. Ltd. where the Bombay High Court held similarly (Para 23–24).

The Court stressed that the adjudicating officer acted with undue haste by passing the order one day after the reply, without examining the documents filed (Para 29). The adjudication process exhibited arbitrariness and disregard for statutory procedure—violating Section 75(4) & 75(5) (Para 27).

On maintainability, the Court reiterated that availability of an alternative remedy does not bar a writ, especially where natural justice is violated (Para 31–36).

Additionally, the Court criticised the Department for wasting judicial time by repeatedly seeking extensions to file counter-affidavit for nearly two years (Para 37).

Judgment / Final Decision (with para references)

The High Court held that the order dated 25.03.2021 was passed in violation of Section 75(4), Section 75(5) and the principles of natural justice (Para 26–27).

Accordingly, the Court set aside the demand order and remanded the matter to the adjudicating authority to pass a fresh order after granting a proper personal hearing (Para 38).

The Court imposed ₹5,000 cost on the Department for its conduct and directed recovery from the erring officer if found negligent (Para 37).

Summary of Precedents Cited (Tabular Form)

Between Fine Lines – Practical Trade Takeaways

This ruling reinforces that every Section 74 adjudication must include a meaningful personal hearing when requested, and mere departmental interactions or informal communication cannot substitute statutory compliance. Trade should insist on documented hearing notices and should challenge any adjudication order passed without such hearing as void. Officers must strictly comply with Section 75(4) and maintain transparent records, failing which the order becomes unsustainable.

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