Gujarat High Court: GST Personal Hearing Under Section 75(4) Cannot Be Waived

Kaustav Chowdhury
2 days ago
4 min read

The Gujarat High Court has reaffirmed that the opportunity of a personal hearing under Section 75(4) of the Central Goods and Services Tax Act, 2017 is mandatory before an adverse order is passed, and that this requirement cannot be waived merely because a taxpayer selected the No option for a personal hearing while replying to a show cause notice. In a set of recent decisions, the court quashed tax orders that were passed without granting a hearing and remanded the matters for fresh adjudication. The ruling is a significant procedural safeguard for businesses facing GST demands, because it treats the right to be heard as something the law guarantees rather than something the taxpayer can accidentally sign away.

What Section 75(4) Requires

Section 75(4) of the CGST Act provides that 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. The provision has two limbs, and the second is the important one here: whenever the authority proposes to pass an order adverse to the taxpayer, a hearing must be offered, regardless of whether the taxpayer specifically asked for one. The court treated this as a statutory expression of the principles of natural justice, which require that no one be condemned unheard.

This means that even a taxpayer who, for whatever reason, did not ask for a hearing is still entitled to one if the department intends to rule against them. The statute does not make the hearing conditional on a request in such cases.

The Court's Reasoning

The petitioners had, in the online reply form, marked that they did not want a personal hearing, and the department later argued that no hearing was therefore necessary. The High Court rejected this, holding that the option exercised by the taxpayer cannot override the statutory mandate where an adverse order is contemplated. An order passed without affording a hearing in such circumstances is vitiated as being in breach of natural justice.

Accordingly, the impugned orders were set aside and the matters remanded for a fresh decision after a proper hearing. The court's approach reflects a wider judicial trend of insisting on procedural fairness in tax adjudication. It mirrors the scrutiny seen when the Bombay High Court held that GST show cause notices cannot bunch multiple financial years into one notice, another instance where a procedural shortcut by the department was struck down.

Why It Matters for Taxpayers

Many taxpayers click through online reply forms quickly and may inadvertently decline a hearing, or assume a hearing is pointless. This judgment confirms that the right to be heard survives such choices when the authority is about to rule against them. If an order has been passed without a hearing in breach of Section 75(4), the taxpayer has a strong ground to challenge it through appeal or a writ petition.

Understanding this protection is as important as knowing how to respond to a tax notice within the correct timelines, because in tax disputes a procedural defect can decide the outcome regardless of the underlying merits. A demand built on an order that ignored the hearing requirement may not survive scrutiny.

Practical Steps

Businesses should always engage with show cause notices substantively, attend any hearing that is offered, and keep records of every communication with the department, including the dates on which notices and replies were exchanged. Where an order has been passed in breach of Section 75(4), an appeal or writ petition can seek to have it quashed and remanded for a fresh hearing.

Maintaining clean compliance also reduces the chance of disputes escalating into demand orders in the first place. Filing returns on time, reconciling input tax credit, and making correct claims such as a properly filed GST refund under Section 54 keep a taxpayer on firmer ground if a dispute ever arises.

What Counts as a Valid Hearing

A valid personal hearing means a real opportunity to present the case, not a mere formality. The authority should communicate the date and mode of hearing, whether in person or through video conferencing, with enough notice for the taxpayer to prepare. Where a taxpayer or an authorised representative appears and makes submissions, those submissions must actually be considered in the final order. An order that records a hearing but ignores what was said can be as defective as one passed with no hearing at all, because the protection under Section 75(4) is a right to a meaningful hearing rather than a tick box exercise.

Key Takeaways

The Gujarat High Court has held that a personal hearing under Section 75(4) of the CGST Act is mandatory before any adverse order, and a taxpayer's earlier choice to decline a hearing does not dispense with it. Orders passed without a hearing can be set aside as a breach of natural justice and remanded for fresh adjudication. Taxpayers should treat every show cause notice seriously, attend hearings, and assert the right to be heard.