Whether an adverse order be passed without affording an opportunity of hearing to the taxpayer?

No, the Honorable Karnataka High Court in the case of M/s. Bangalore Golf Club v. Commercial Tax Officer [W.P. No. 8050 of 2024 dated June 05, 2024] set aside the order as no opportunity of hearing was granted to the Petitioner before passing an adverse order. The Honorable Court held that it is mandatory to grant the opportunity of hearing as required under section 75(4) of the CGST Act when an adverse order is being contemplated against the Petitioner.

The Honorable Karnataka High Court made clear that setting aside the impugned order is not to be taken as recording a finding as regards the contention of the petitioner regarding passing a common order for two different financial years.

Author’s Comments

This is expressly given in the statute [Section 75(4) and 126(3)] that the opportunity of being heard must be presented where it is specifically asked by the taxpayer or where an adverse order is contemplated against the taxpayer. The petitioner must have disputed the service of notice and must have allowed the Revenue to discharge their burden to prove regarding service of notice. Approaching a writ court under Article 226 or Article 32 of the Constitution of India must be a strategic and well-thought decision. If the Honorable Court remands back the case for the second round of adjudication and the notice is not vacated, then it turns out to be a fruitless exercise unable to fetch the desired relief.

It is not always that suffering an ex-parte order will be disastrous. Most of the times, ex parte orders without a reply by taxpayers, are not sustainable on facts and law. Moreover, every mistake of the Revenue cannot become ground to vacate notice and achieve the desired outcome.

Download Judgment