Facts of the Case

The petitioner, M/S Kanhaiya Traders, through its proprietor Kanhaiya Lal Gupta, challenged an order dated 26.10.2024 passed under Section 74 of the GST Act as well as the subsequent appellate order dated 21.08.2025 dismissing the appeal as time-barred. The petitioner's central grievance was that no proper opportunity of hearing was granted, since the show cause notice fixed a date for personal hearing that was earlier than the date fixed for filing a reply – making it impossible to be meaningfully heard after presenting the defence.

Issues Involved

  1. Whether a Section 74 order is sustainable where the show cause notice fixed the personal hearing date before the deadline for filing the reply.

Petitioner's Arguments

  • No opportunity of hearing was granted while passing the order under Section 74, since the personal hearing date preceded the date fixed for filing the reply.
  • This precise issue was dealt with by this Court in Writ Tax No.303 of 2024 (Mahaveer Trading Company v. Deputy Commissioner, State Tax) vide judgment dated 04.03.2024.

Respondent's Arguments

  • Based on instructions, the Standing Counsel confirmed that in the show cause notice, the date fixed for personal hearing was indeed prior to the date fixed for filing the reply.

Court Order / Findings

  • The Department did not dispute the factual position that the hearing date preceded the reply date.
  • On this sole ground, following Mahaveer Trading Company, the Court allowed the petition, quashing both the order dated 26.10.2024 and the appellate order dated 21.08.2025.
  • The matter was remanded to the assessing authority to pass a fresh order after giving the petitioner an opportunity of hearing.

Important Clarification

  • A show cause notice under Section 74 that schedules the personal hearing before the deadline for filing a written reply defeats the very purpose of the hearing, since the taxpayer cannot be meaningfully heard on a defence not yet due; such a sequencing defect alone is sufficient to vitiate the resultant order for want of proper opportunity.

Sections Involved

  • Section 74, CGST/UPGST Act, 2017 – determination of tax involving fraud, wilful misstatement or suppression of facts.

Decision – In Favour of

Disposed of in favour of the Assessee; both the demand order and the appellate order were quashed, and the matter remanded for a fresh order after a proper hearing.

Case Details

High Court of Judicature at Allahabad, Lucknow Bench; Writ Tax No. 990 of 2025; Coram: Hon'ble Pankaj Bhatia, J.; Order dated 23.09.2025.

Link to Download the Order

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