Madhya Pradesh High Court Dismisses Plea on GST Personal Hearing Denial
In a recent ruling, the Madhya Pradesh High Court, Indore Bench, dismissed a petition filed by Future Consumer Limited. The petitioner challenged an order by the Deputy Commissioner of State Tax under Section 73 of the GST Act, claiming denial of the right to a personal hearing as per Section 75(4). The court clarified that the petitioner failed to formally request a hearing despite receiving a show-cause notice (SCN).
Case Background: Importance of Requesting a Personal Hearing
Future Consumer Limited sought to invalidate a tax liability order amounting to Rs. 86,73,188 along with penalties and interest of Rs. 1,16,65,438. The core issue was the alleged lack of a personal hearing, which they claimed violated their rights under Section 75(4) of the GST Act. The petitioner argued that the opportunity for a personal hearing must be automatically provided.
However, the division bench, comprising Justice Vivek Rusia and Justice Binod Kumar Dwivedi, emphasized that Section 75(4) only mandates a personal hearing when explicitly requested in writing or if the authority plans to take an adverse decision. The absence of a formal hearing request weakened the petitioner’s case, as no reply or attendance at the hearing was documented.
Clarifying Section 75(4): Request Must Be in Writing
The High Court also referenced the earlier case of M/s Technosys Security System Pvt. Ltd. v. Commissioner of Commercial Taxes, where a personal hearing was denied despite a reply being filed. In that scenario, the petitioner actively participated, which was significantly different from the current case where Future Consumer Limited neither replied to the SCN nor attended hearings.
The ruling emphasized that taxpayers must actively communicate their intent to have a hearing, either by submitting a written request or by appearing during the proceedings. Failure to do so means that they cannot subsequently claim denial of a personal hearing.
Court’s Final Decision: No Hearing, No Grounds for Appeal
The Court stated: “When the person after receipt of the show-cause notice chooses not to appear before the authority to file a reply or to make a request for a personal hearing, then after passing the final order, he cannot allege that an opportunity of hearing has been denied to him.”
The petitioner’s plea was dismissed, and they were advised to appeal to the appellate authority along with a request for condonation of delay, should they wish to challenge the tax order on its merits. This decision underlines the critical procedural requirement for taxpayers to formally request a personal hearing if they wish to exercise their right under Section 75(4).
Key Takeaway for Taxpayers
This ruling by the Madhya Pradesh High Court reinforces that the right to a personal hearing is not automatic in GST disputes. Taxpayers must actively respond to show-cause notices, file appropriate replies, and request hearings in writing to safeguard their rights.