GST Order issued imposing Penalty u/s 74 without Granting Hearing Opportunity: Madras HC sets aside order [Read Order]

Madras HC Quashes GST Penalty Order, Cites Lack of Hearing

In a significant ruling, the Madras High Court has set aside a Goods and Services Tax (GST) penalty order issued under Section 74 of the CGST Act. The Court’s decision hinged on the fact that the assessee was not granted an opportunity for a personal hearing before the penalty was imposed.

Order Overturned Due to Procedural Lapse

The core of the matter lies in the principles of natural justice. The High Court observed that denying the assessee a hearing violated these principles, making the subsequent penalty order unsustainable. This ruling underscores the importance of adhering to due process in tax proceedings.

The Case in Brief

The penalty order, dated September 26, 2024, was issued without affording the affected party a chance to present their case. Section 74 of the CGST Act deals with cases involving fraud, willful misstatement, or suppression of facts to evade tax. However, even under this section, the law mandates a fair hearing.

What Happens Next?

The Madras High Court has remanded the matter back to the adjudicating authority for fresh consideration. This means the authority will have to re-examine the case, ensuring that the assessee is given a proper opportunity to be heard before any decision is made. Key actions expected are:

• Re-evaluation of the facts and evidence.
• Granting the assessee a hearing to present their arguments.
• Issuing a fresh order after considering the submissions made during the hearing.

This case serves as a reminder to tax authorities nationwide to strictly adhere to procedural guidelines and principles of natural justice when imposing penalties.