Karnataka HC: GST Section 75(4) Ensures a Hearing Opportunity Before Any Adverse Order

Setting aside the GST recovery proceedings the Karnataka High Court stresses that the purpose of section 75(4) of the Goods and Services Tax (GST Act.), 2017 is to ensure that a fair chance of hearing is required to be given before passing any adverse order.

The applicant, Breakbounce India Pvt. Ltd. contested the adjudication order on November 21, 2023, and the related summary order furnished via the second respondent including the following recovery measures.

It was claimed by the applicant that based on an audit report the second respondent asked them to release the tax obligations with interest. However, the applicant, the audited balance sheet along with additional pertinent documents in answer to the audit report, were allegedly not regarded, and the adjudication was concluded without proper notice.

It was claimed by the applicant that the notice was served through email however as of the genuine cause they were not learned and asked for another chance to take part in the adjudication procedure under Section 75(4) of the Karnataka GST Act, 2017.

The Additional Government Advocate, Sri K. Hemakumar, claimed that adequate notice has been allotted as needed under the law and the applicant’s claim of being known of the emailed notice was not enough to grant an updated chance.

Justice S. Sunil Dutt Yadadv heard both sides. It was observed by the court that the order was issued ex-parte without the input of the applicant. Considering that electronic service of notice may suffice, it was determined by the court that in the same matter, the substantive rights were at stake demanding a remand to permit the applicant another opportunity to answer to the Show Cause notice on September 27, 2023.

It was outlined by the court that the purpose of Section 75(4) is to ensure a chance is given before passing any adverse order.

The orders and the recovery proceedings were set aside by the High Court. The case was restored to the phase of the SCN allowing the applicant to answer within 4 weeks of obtaining a certified copy of the order of the court.

It was mentioned by the court that the problems of limitation shall not emerge and all the challenges remain open for consideration. Subsequently, the petition was disposed of.