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Viraaj Vashishth

April 16, 2025

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FAQs

GST Rules

Opportunity of Hearing Before Passing Orders by GST Authority

Certainly, in terms of indirect tax structures in India, Goods and Services Tax significantly redefines and reorientation of indirect tax structures within the country. The introduction of the Central Goods and Services Tax Act, 2017 (CGST Act) would have taken the tax terrain toward a more uniform and compliance-oriented perspective. Nevertheless, in a technologically advanced and administratively active tax system, the role of natural justice will still impart to the whole process. The most hallmark of natural justice, especially in taxation matters, is the opportunity of hearing before passing orders by the GST Authority.

The GST Authority has been invested with a range of quasi-judicial powers, such as issuing notices, investigation, and imposing tax liabilities under penalties or cancelling registrations. It has to be exercised within the confines of fairness and procedural propriety-the opportunity of being heard, particularly a personal hearing in GST cases, is a keystone of this fairness.

Also Read: Goods Sent on Approval Basis Before Transition to GST

Legal Foundation of Opportunity of Hearing

The doctrine of natural justice understands two essential principles: nemo judex in causa sua (no one must be a judge in his own cause) and audi alteram partem (hear the other side). The second principle directly states that the opportunity being given to a person to defend himself shall be in such a way that he can justify any action adversely affecting his rights.

This is reinforced by constitutional law in India in Article 14 (Right to Equality) and Article 21 (Right to Life and Personal Liberty) of the Constitution of India. These provisions lay down that any administrative or quasi-judicial action must be just, fair, and reasonable, not arbitrary. Therefore, in any hearing conducted by the GST Authorities, this principle must be adhered to before deciding upon any action that may be prejudicial to the taxpayer. This command finds explicit mention in the CGST Act. Section 75(4) of the CGST Act, 2017 provides:

“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.”

This provision makes it quite clear that even without any written request having been made by the taxpayer, if any adverse decision is proposed, the taxpayer should have a hearing.

Statutory Provisions Governing Personal Hearing in GST

A personal hearing is mandated for the GST Authority in one or more sections of the CGST Act. These include:

Section	Provision	Relevance to Hearing
Section 73	Determination of tax not paid/short paid without fraud	Adverse order may be passed; requires hearing
Section 74	Same as above, but involving fraud/willful misstatement	Higher penalties involved; personal hearing crucial
Section 75(4)	General procedural safeguard	Mandates hearing before adverse decision
Section 29	Cancellation of registration	Impacts business continuity; hearing required

Furthermore, hearings have been underlined in the GST Rules as well as Departmental Circulars issued by the CBIC, especially prior to the final adjudication of notices or cancellation orders.

When and How is the Opportunity of Hearing Provided?

First, a show-cause notice is issued by the GST authority. Taxpayers are then given time to respond. When the authorities intend to pass an order of disadvantage-the levy of tax liability, tax penalty, or cancellations of registration-the legislation provides that opportunity must be given to the taxpayer to explain his case by pre-format representation and hearing of the persons in GST proceedings.

The hearing can be conducted in person or, more importantly, through virtual modes, especially after the period of COVID-19 where digital platforms have taken up a major chunk of usage. This makes it better accessible but creates challenges in procedure.

In several cases, courts have even gone ahead to say that the opportunity of being heard does not depend on the request of the taxpayer.

The Madras High Court in a recent case emphatically held that:

“Providing an opportunity of personal hearing is mandatory, whether taxpayer requests or not.”

The subject judgment in question here is a precedent that is set concerning intrinsic hearing rights of any taxpayer such that such rights cannot be undermined under the guise of procedural efficiency.

Consequences of Denial of Personal Hearing

In that case, despite the whole adjudication being susceptible to impugning illegal challenge within courts and tribunals officiating, orders are entered except where the opportunity of hearing was denied. Such actions are termed as violation of principles of natural justice, thus going against the constitution.

The Supreme Court while deciding Canon India Pvt. Ltd. v. Commissioner of Customs, observed that if the hearing is not to be valid, the order itself loses its force. In the same way, it follows in GST proceedings, where if personal hearing is not given and orders are passed against the assessee, the orders are likely quashed, and cases may be remanded for adjudication afresh.

You Should Also Read: GST rates and 6405 HSN code for Other Footwear

Practical Challenges and Taxpayer Experiences

While the law is clearly on the side of the taxpayer, a number of problems can be faced in obtaining effective hearings. These include:

1. Short notice periods do not allow adequate time for preparing a proper defense.

2. Non-speaking orders where the authority simply does not address the taxpayer's submissions.

3. Technical glitches in virtual hearings.

4. SCNs with vague terms that inhibit the making of any representation.

Such procedural infirmities not only detract from the rights of the taxpayer but also unjustifiably encumber the appellate system with litigation that could have otherwise been avoided.

Judicial Interpretations Strengthening the Hearing Mandate

Indeed, the taxpayer has been heard in a court process, as has been stated earlier in the Madras High Court order. High Courts and GST appellate authorities have reiterated that personal hearing in GST cases is not a dispensable formality but an essential requirement.

In quite a few cases, the courts have directed the authorities to take up the re-adjudication of matters after hearing properly from the petitioner. This consistent pattern in the judiciary underpins the core of this protection in any proceedings under GST.

Recommendations for Strengthening the Hearing Process

The following improvements to ensure that the GST Authority hearing process is meaningful and efficient are suggested:

1. Show Cause Notices (SCN) should be detailed and clear, mentioning all allegations and the proposed actions.

2. Taxpayers must be allowed reasonable time to prepare and respond.

3. Personal hearings should be scheduled with reasonable prior notice, allowing the taxpayer to make submissions personally or through an authorized representative.

4. Authorities must issue speaking orders that will address each submission made at the hearing.

5. Virtual hearings should involve means of recording and proper mechanisms for scheduling so that transparency can be maintained.

Conclusion

The opportunity of being heard before passing any order to the detriment of an affected party is not an arbitrary concession but a legal right intricately woven into the fabric of natural justice. The CGST Act, undergirded by judicial decisions, expresses this principle as an obligation which the GST Authorities must respect at every occasion that calls for it. The existence of a fair, reasonable, and transparent hearing environment reinforces the credibility of the GST system in the eyes of its taxpayers. This would be a continuing feature of the growing GST system to help ensure the justness of tax administration, the system's accountability, and its adherence to constitutional values.

FAQs

1. And What will happen if no opportunity of hearing is provided?

The order may be set aside in violation of the principles of natural justice by the appellate authorities or courts.

2. Is a written submission enough or is a personal hearing also necessary?

Although written replies are valuable, a personal hearing is required for oral arguments and clarifications to be duly acknowledged in GST cases.

3. Can Hearing by the GST Authority be Virtual?

Sure, most of GST Authority Hearings after COVID is done through a video conferencing following technical feasibility and prior notice.

4. Is the Taxpayer Given Notification before His Hearings with the GB Hearing Authority?

Yes, proper notifications should be dispatched to provide an adequate hearing prep time for the taxpayer.

5. Can I ask for a personal hearing in GST proceedings?

You may request it, but even in the absence of such a request, a hearing opportunity must be provided by the GST Authority if the order is adverse.

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