 of the GST Act.){kind=link}
The Calcutta High Court, in Rajat Dalmia v. Assistant Commissioner of Revenue & Others (WPA 1031 of 2026, decided on 09 July 2026), reiterated the statutory requirement of granting a meaningful opportunity of personal hearing before passing an adverse order under Section 73 of the GST law. The judgment reinforces the principles of natural justice and confirms that a defective show cause notice cannot form the foundation of a valid assessment.
The dispute arose after the petitioner challenged a Show Cause Notice issued in Form GST DRC-01 under Section 73 of the West Bengal GST Act. Although the notice required the petitioner to submit a reply, the authority had marked the columns relating to the date, time and venue of personal hearing as “Not Applicable”. An adjudication order and consequential demand notice in Form GST DRC-07 were thereafter passed against the petitioner.
The petitioner argued that the proceedings were contrary to Section 75(4) of the GST Act and violated the principles of natural justice, relying upon the earlier decision of the Calcutta High Court in Goutam Bhowmik v. State of West Bengal. The Court accepted this contention and held that where an adverse decision is contemplated, the proper officer is statutorily bound to provide an opportunity of personal hearing. The omission to specify the date, time and venue of hearing in the DRC-01 notice clearly demonstrated that no effective hearing was intended, rendering the entire proceedings legally unsustainable.
The Court further observed that once the initial show cause notice suffers from a fundamental legal defect, all consequential proceedings founded upon it are equally invalid. Applying this principle, the Court set aside the DRC-01 Show Cause Notice dated 27 December 2023, the adjudication order, and the DRC-07 demand notice dated 25 April 2024. However, liberty was granted to the department to initiate fresh proceedings under Section 73 after providing the petitioner with a proper opportunity of hearing. The Court also clarified that, if fresh proceedings are commenced, the limitation under Section 73(10) shall run from the date of the fresh notice.
This judgment is another important authority emphasizing that compliance with Section 75(4) is mandatory and not merely procedural. Tax authorities cannot deny taxpayers a personal hearing where an adverse order is contemplated, and failure to comply with this statutory requirement vitiates the entire adjudication process.
Why This Judgment is Important
This decision will be particularly relevant for Advocates, Chartered Accountants, GST Practitioners, Tax Consultants, Corporate Tax Teams and businesses facing GST adjudication proceedings. It reiterates that procedural safeguards under the GST law are substantive rights, and any assessment passed without complying with mandatory hearing requirements is liable to be quashed by constitutional courts.
Key Takeaways
- Personal hearing under Section 75(4) is mandatory where an adverse decision is proposed.
- A DRC-01 notice that omits the date, time and venue of hearing is legally defective.
- Violation of principles of natural justice vitiates the entire adjudication process.
- A defective show cause notice cannot sustain subsequent assessment and demand proceedings.
- Fresh proceedings may be initiated only after complying with statutory hearing requirements.