Shreenath Logistics Vs State of Madhya Pradesh And Others (Madhya Pradesh High Court)
The Madhya Pradesh High Court considered a writ petition filed under Article 226 of the Constitution challenging an order dated 25.03.2026 and the related show cause notice dated 16.05.2024. The petitioner sought quashing of the adjudication order on the grounds that it was passed without assigning reasons, without granting a proper opportunity of hearing, and in violation of the principles of natural justice. The petitioner also challenged the composite show cause notice issued in Form DRC-01 covering the financial years 2017-18 to 2022-23.
According to the petition, the show cause notice alleged discrepancies in the GST returns filed by the petitioner. The petitioner submitted a detailed reply on 05.10.2024 raising objections and providing clarifications. After approximately 17 months, respondent No.4 passed the impugned order dated 25.03.2026 and issued Form DRC-07, raising a tax demand of Rs. 2,58,72,212, interest of Rs. 1,66,59,753, and penalty of Rs. 3,75,000, aggregating to Rs. 4,29,06,965. The petitioner contended that the order was passed without considering the reply, without granting a personal hearing despite a specific written request, and by an officer who allegedly lacked jurisdiction.
The petitioner further submitted that issuance of a composite show cause notice covering multiple financial years was impermissible under the GST regime and referred to previous decisions of various High Courts. Reliance was also placed on an earlier Division Bench decision of the Madhya Pradesh High Court dated 22.01.2024 in W.P. No.15923 of 2023 and connected matters, which held that an opportunity of hearing is mandatory before passing an adverse order. It was argued that Section 75(4) of the GST Act expressly requires grant of a hearing wherever an adverse decision is contemplated or where the person concerned makes a written request.
The State opposed the petition. However, the learned Deputy Advocate General fairly submitted that before passing an adverse order, an opportunity of hearing ought to be granted in terms of Section 75(4) of the GST Act.
The High Court examined Section 75(4) of the GST Act and reproduced the findings from its earlier Division Bench judgment, observing that the provision mandates an opportunity of hearing in two situations: where a written request is made by the person chargeable with tax or penalty, and where an adverse decision is contemplated. The Court also referred to the principle that where statutory language is plain and unambiguous, it must be given effect.
Considering the admitted position that no personal hearing had been afforded to the petitioner, the Court held that the decision-making process stood vitiated and was contrary to both the principles of natural justice and the mandatory requirement under Section 75(4) of the GST Act.
Accordingly, the High Court set aside the impugned order dated 25.03.2026. It directed the respondents to provide the petitioner with an opportunity of personal hearing before an officer other than the officer who had issued the show cause notice, and thereafter pass a fresh order in accordance with law. The writ petition was disposed of. The Court clarified that it had not expressed any opinion on the merits of the case.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
Present petition is preferred by petitioner under Article 226 of the Constitution of India seeking following reliefs :-
“i. To issue a writ of certiorari or other appropriate writ, order or direction to Quash the order dated 25.03.2026 (Annexure P – 6) passed by respondent no.4 as it was passed without giving any reasons and proper opportunity of hearing and declare the same to be illegal, arbitrary, unauthorized by law, violative of natural justice, and is liable to be quashed.
ii. To issue a writ of certiorari or other appropriate writ, order or direction to Quash the Show Cause Notice dated 16.05.2024 (Annexure P – 1) as same is being issued by respondent no.3 without following the mandatory procedure and was issued for multiple years which is not permissible.
iii. Pass such other and further order as this Hon’ble Court may deem just and proper in the facts and circumstances of the case.”
2. As per the averments made in the petition, a composite show cause notice in Form DRC-01 dated 16.05.2024 for the financial years 201718 to 2022-23 was issued to the petitioner by respondent No.3 alleging discrepancies in the returns filed by the petitioner. In response thereto, the petitioner duly submitted a detailed reply on 05.10.2024 raising various objections and furnishing clarifications on the merits of the case before respondent No.3. However, after a lapse of approximately 17 months, respondent No.4, who allegedly had no jurisdiction over the petitioner, passed the impugned order dated 25.03.2026 and issued Form DRC-07, creating a tax demand of Rs.2,58,72,212/-, interest of Rs.1,66,59,753/-, and penalty of Rs.3,75,000/-, aggregating to Rs.4,29,06,965/-. The said order was passed without considering the reply submitted by the petitioner and without affording any opportunity of personal hearing, thereby violating the principles of natural justice. Hence, the present petition.
3. Learned counsel for the petitioner submitted that the impugned order has been passed without affording any opportunity of personal hearing to the petitioner whereas the petitioner while submitting the reply (Annexure-P/5) had specifically prayed for an opportunity of personal hearing before passing final order in the matter. It is further submitted that the final order was passed after an inordinate delay of about 18 months from the date of filing of the reply.
4. Learned counsel further submitted that the action of the respondents in issuing a composite/block show cause notice covering multiple financial years is impermissible in law and that various High Courts have consistently held that a block show cause notice cannot be issued under the GST regime. It is also submitted that the impugned order dated 25.03.2026 has been passed by a non-jurisdictional officer who had no authority over the petitioner.
5. Learned counsel for the petitioner further submitted that, in similar circumstances, Division Bench of High Court of M.P. Bench at Gwalior vide order dated 22.01.2024 passed in W.P. No.15923 of 2023 and connected matters, held that an opportunity of hearing is mandatory before passing any final adverse order. Learned counsel for petitioner also submitted that Section 75(4) of the GST Act specifically mandates grant of an opportunity of hearing wherever an adverse decision is contemplated. Therefore, impugned order dated 25.03.2026 (Annexure P-6) deserves to be quashed.
6. On the other hand, learned Deputy Advocate General opposed the petition. However, he fairly submitted that before passing any adverse order, an opportunity of hearing ought to be granted to the petitioner in terms of Section 75(4) of the GST Act.
7. Heard learned counsel for the parties and perused the material available on record.
8. A Division Bench of this Court, vide order dated 22.01.2024, in paragraphs 7, 8 and 9, held as under :-
7. Before dealing with rival contentions, it is apposite to quote Section 75 (4) of GST Act which reads as under:-
“(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”
(Emphasis supplied)
8. A plain reading of sub-section 4 of Section 75 of the Act makes it crystal clear that “opportunity of hearing” must be granted in two situations viz (a) where a request in specific is received in writing from the person chargeable; (b) where any adverse decision is contemplated against such person.
9. This is trite that when language of statute is plain a n d unambiguous, it should be given effect to irrespective of its consequences. (See Nelson Motis Vs. Union of India (1992) 4 SCC 711).”
9 . In view of the aforesaid, and considering the admitted position that no opportunity of personal hearing was afforded to the petitioner, the decision-making process adopted by the respondents stands vitiated and is contrary to the principles of natural justice as well as the mandatory requirement contained in sub-section (4) of Section 75 of the GST Act.
10. As a result, the impugned order dated 25.3.2026 (Annexure-P/6) is set aside. The respondents shall provide an opportunity of hearing to the petitioner by some other officer than the officer who has issued the show cause notice to the petitioner and thereafter to pass final order, in accordance with law.
11. Writ petition stands disposed of.
12. It is made clear that this Court has not expressed any opinion on the merits of the case.
