Personal Hearing in GST Cases Is Mandatory, Rules Allahabad High Court | Aaerm Law Associates
đź“… May 23, 2025 | By Aaerm Law Associates
In a crucial judgment that strengthens the rights of taxpayers, the Allahabad High Court (Lucknow Bench) ruled that tax authorities must provide a personal hearing before issuing adverse orders under the Central Goods and Services Tax Act, 2017 (CGST Act). The Court delivered this decision in the case of Prem Traders v. State of Uttar Pradesh [Writ Petition No. 261/2025], dated March 28, 2025.
This ruling reinforces a core principle of natural justice: individuals must have a fair chance to present their case before facing consequences.
🔎 Case Overview: What Triggered the Petition?
Prem Traders, the petitioner, filed a writ under Article 226 of the Constitution. They challenged an order issued on April 29, 2024, under Section 73 of the CGST Act. Their core grievance? The Assessing Authority skipped a mandatory personal hearing before passing the order.
In fact, the order clearly stated that the same date was set for both filing objections and the hearing—leaving no real opportunity for oral arguments. This approach contradicted the CBIC Master Circular (F.No. 96/1/2017 dated March 10, 2017), which outlines proper procedural conduct in such cases.
⚖️ Key Findings by the High Court
On reviewing the facts, the Allahabad High Court quashed the impugned order. Here’s what it found:
âś… 1. Personal Hearing Is Not Optional
The Court cited Section 75(4) of the CGST Act, which mandates a hearing when an adverse decision is on the table—even if the taxpayer hasn’t formally requested one. Simply put, the authority must proactively offer this hearing.
đź“š 2. Consistent Judicial Precedents
The Court leaned on two recent judgments:
- Mahaveer Trading Company v. Deputy Commissioner, State Tax (Writ Tax No. 303 of 2024)
- M/s Mohini Traders v. State of Uttar Pradesh (Writ Tax No. 551 of 2023)
In both cases, the Court ruled that failure to hold a hearing—even if the taxpayer didn’t request one—violates basic legal rights.
❌ 3. Violation of Natural Justice
The Court concluded that denying a hearing directly breached the taxpayer’s right to natural justice. This flaw made the entire order legally invalid. The Court ordered the Assessing Authority to reconsider the matter from scratch, ensuring a personal hearing this time.
đź“Ś What This Means for Taxpayers
This ruling is a strong reminder that tax authorities cannot skip procedural safeguards. Let’s break down the implications:
đź‘‚ You Have a Right to Be Heard
If an adverse tax order is looming, the GST authorities must give you a chance to speak. This is not a privilege—it’s your legal right.
✍️ You Don’t Need to Request a Hearing
The law doesn’t require taxpayers to tick a box or submit a formal request. The responsibility lies with the tax department.
⚖️ A Shift Towards Accountability
This decision pressures tax officers to follow due process. They can no longer rush through orders without fair engagement.
đź“Š Impact on the Legal Landscape
Law firms, chartered accountants, and in-house legal teams should treat this ruling as a compliance benchmark. GST assessments must now clearly document opportunities for hearings. Failure to do so could invalidate proceedings entirely.
Moreover, this judgment will likely guide lower courts and tribunals in future disputes, creating a uniform legal standard across India.
đź“š Statutory Insight: Section 75(4) of the CGST Act
This section of the Act reads:
“An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”
However, in light of this and similar rulings, the courts have interpreted this to mean that any adverse action triggers the mandatory hearing requirement, regardless of the taxpayer’s explicit request.
đź“ť Conclusion: A Victory for Procedural Fairness
The Allahabad High Court’s ruling in Prem Traders v. State of Uttar Pradesh sends a strong message: Procedural fairness is not negotiable.
Taxpayers now have stronger grounds to contest GST orders that skip this vital step. Going forward, tax officers must be cautious—failing to offer a fair hearing can undo their entire assessment.
