What’s the Issue? No Notice, No Hearing, Yet Major GST Action Taken
In a recent ruling, the Madras High Court overturned a GST demand order issued against a construction company. Why? Because no notice was served, no hearing was granted, and the company was not given an opportunity to respond before the tax was imposed.
This sparked widespread concern, as the case highlights a violation of basic principles of natural justice in India’s GST enforcement process.
Background of the Case
A construction company was investigated in early 2024 for discrepancies in Input Tax Credit and turnover.
The GST department scheduled a hearing for July 2024, but the company requested more time to respond.
Ignoring the request, the tax officer issued a demand order under Section 74 of the CGST Act, without any further notice or hearing.
The company filed a writ petition in the Madras High Court, claiming denial of natural justice.
What the High Court Said
The Madras High Court ruled in favor of the company, stating:
No proper “speaking order” (reasoned order) was given.
The company’s right to a fair hearing was violated.
Section 75(4) of the CGST Act clearly mandates an opportunity of hearing before any adverse order is passed.
Result: The demand order was quashed, and the department was directed to issue a fresh notice, grant a hearing, and only then pass an order.
Top 5 FAQs on the GST Notice Controversy
1. Can the GST department take action without giving a notice?
No. As per Section 75(4) of the CGST Act, the taxpayer must be given a reasonable opportunity to be heard before any adverse order is issued.
2. What is a “speaking order”?
A speaking order is a legally valid order that clearly explains the reasoning behind the decision, based on the facts and evidence presented.
3. What can a taxpayer do if GST is imposed without notice?
The taxpayer can approach the High Court under Article 226 of the Constitution by filing a writ petition, claiming denial of natural justice.
4. Are there similar judgments from other High Courts?
Yes. Courts in Gujarat, Andhra Pradesh, Bombay, and Telangana have all ruled in favor of taxpayers where GST officers bypassed notice and hearing procedures.
5. Will this ruling affect other GST cases?
Yes. This case sets a strong precedent, reinforcing that due process must be followed before issuing any tax demands under GST law.
A Win for Taxpayer Rights
The Madras High Court’s ruling serves as a crucial reminder to GST officers across India: no tax demand is valid without notice and fair hearing. The GST regime must uphold transparency, fairness, and the taxpayer’s right to defend their case.
This verdict not only gives relief to the affected company but also strengthens the legal protection available to all registered taxpayers under the GST law