Show Cause Notice Defect Leads to Quashing of GST Demand by Orissa High Court

Case Details:
Case Title: M/s. Sangram Keshari Lenka v. Chief Commissioner of CT & GST, Odisha
Court Name: High Court of Orissa at Cuttack
Petition Number: W.P.(C) No. 31867 of 2024
Date of Judgment: 20.12.2024
Category of Dispute: Violation of Natural Justice in Demand Order
Relevant Sections: Section 74 and Section 75(4) of the OGST Act, 2017
Coram: Justice Arindam Sinha and Justice M.S. Sahoo

📝 Facts of the Case

[Para 1]
The petitioner, M/s. Sangram Keshari Lenka, challenged a demand notice dated 29.09.2021 issued under Section 74 of the Odisha Goods and Services Tax Act, 2017, for FY 2018–19.

[Para 1]
The show cause notice (SCN) dated 31.03.2021 only mentioned the date for filing the reply but failed to mention any date or time for personal hearing, though the notice suggested both would be provided.

[Para 1]
Due to the COVID-19 pandemic, the petitioner could not file the reply within time.

❓Question(s) in Consideration

[Para 1 & 3]
Whether the absence of a specific date and time for personal hearing in the show cause notice amounts to a violation of principles of natural justice?

[Para 2 & 3]
Whether the impugned demand can be sustained in light of the procedural defect in the SCN?

👁️‍🗨️ Observation of the Court

[Para 3]
The Court observed that the SCN did not mention the date and time of the personal hearing, which is required when demand proceedings are initiated. This omission amounts to a procedural defect and violates the principles of natural justice.

[Para 3]
Even the State’s counsel conceded that the petitioner could be granted time to file a reply and seek personal hearing if necessary.

🧑‍⚖️ Judgment of the Court

[Para 4]
The High Court set aside and quashed the impugned demand order. The petitioner was granted two weeks to file a reply to the SCN, with liberty to request a personal hearing. If no reply is filed within the stipulated time, the original demand order shall stand automatically revived.

[Para 5]
Writ petition disposed of accordingly.

🔍 Between Fine Lines

• Demand was quashed as the show cause notice failed to specify hearing date.

• Court upheld natural justice principles.

• Taxpayer allowed to respond within 2 weeks.

• Personal hearing to be granted upon request.

• If reply not filed, demand order revives automatically.

📚 Summary of Referred Cases

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