The Hon’ble High Court of Jammu & Kashmir and Ladakh in Zakir Hussain v. Union of India & Ors., WP(C) No. 812/2025, decided on 13.10.2025, examined a challenge to an order passed under Section 73(9) of the CGST/SGST Act. The petitioner contended that his reply to the show cause notice had not been considered by the department. The record revealed that a show cause notice dated 25.11.2024 in Form GST DRC-01 was served upon the petitioner, calling for a reply on or before 30.12.2024. Although the petitioner submitted his reply on 20.01.2025—after the prescribed time but prior to the passing of the final order—the State Tax Officer (STO) ignored the reply solely on the ground of delay and proceeded to issue the final order on 26.02.2025 under Section 73(9), raising a demand of ₹15,44,922/-. The petitioner assailed this order before the High Court, arguing that it was passed without considering his reply and was, therefore, violative of the principles of natural justice.
Issue before Court
The issue before the Court was whether the delayed submission of a reply, filed before the adjudication order, could justify its rejection and whether such non-consideration vitiates the proceedings under Section 73 of the CGST Act.
Court observations
The Court observed that a conjoint reading of Section 73 of the CGST Act and Rule 142(1) of the CGST Rules makes it abundantly clear that no statutory time limit has been prescribed for submitting a reply to a show cause notice issued under Section 73(1). However, the provision does not prohibit the proper officer from specifying a reasonable period within which the noticee may furnish a reply. Such a time frame is meant to facilitate timely adjudication, but it cannot be construed as an absolute bar against considering a reply that is submitted after the indicated date but before the final order is passed.
The Court further observed that while it is correct that once the period prescribed in the show cause notice for submitting a reply or representation has expired, the proper officer may presume that the assessee has nothing further to state and proceed to pass an order under Section 73(9) of the CGST Act, 2017, the situation changes if a reply or representation is received before the final adjudication order is made. In such a case, it becomes incumbent upon the proper officer to consider the reply or representation and then pass a reasoned and speaking order under Section 73(9), after duly dealing with the contentions raised therein. This is because the time limit for filing a reply to the show cause notice is not statutorily prescribed and remains within the discretion of the proper officer. Therefore, once the reply is received prior to the passing of the final order, it must be taken into account in the spirit of fairness and adherence to the principles of natural justice.
The Court also observed that, ordinarily, a delay in submitting the reply or representation in response to a show cause notice issued under Section 73(1) of the CGST Act would entitle the proper officer to proceed and pass an order under Section 73(9) on the presumption that the assessee has nothing further to state in the matter. However, where the reply or representation is received before the final order under Section 73(9) is passed, it is in the interest of justice, equity, and fair play that such response be duly taken into account. The proper officer is therefore expected to consider the reply on merits and thereafter pass a reasoned and speaking order under Section 73(9) of the CGST Act, 2017, ensuring that the adjudication process remains fair and consistent with the principles of natural justice.
For the foregoing reasons, the Court held that when a response or representation to a show cause notice issued under Section 73(1) of the CGST Act is received by the proper officer after the period stipulated in the notice but before the passing of the final order, it becomes incumbent upon the proper officer, in the interest of justice, equity, and fair play, to consider such response before proceeding to pass the final order under Section 73(9). The Court clarified, however, that nothing in law prevents the proper officer from passing an appropriate order under Section 73(9) immediately after the expiry of the time limit indicated in the show cause notice, on the presumption that the assessee has chosen not to submit any reply or defence.
Court Decision
In the instant case, it is undisputed that the reply to the show cause notice issued by the proper officer under Section 73(1) of the CGST Act was received before the passing of the final order dated 26.02.2025 under Section 73(9). In such circumstances, the proper officer was not justified in declining to consider the reply merely on the ground that it was submitted after the stipulated date mentioned in the notice. Once the reply was on record prior to adjudication, the officer was bound to take it into consideration before passing the final order. The failure to do so and the passing of the order as if no reply, explanation, or representation had been submitted amounts to a violation of the principles of natural justice and renders the order unsustainable in law.
For the foregoing reasons, the Hon’ble High Court found merit in the petition and accordingly allowed it. The impugned order dated 26.02.2025 passed by the State Tax Officer, Circle Kishtwar, under Section 73(9) of the CGST Act, 2017, was set aside. The Court directed that the STO, Circle Kishtwar, shall be at liberty to pass a fresh order under Section 73(9) of the CGST Act after duly considering the reply submitted by the petitioner to the show cause notice on 20.01.2025. The Court further directed that the petitioner be afforded an opportunity of oral hearing before the passing of the fresh order. It was also observed that any tax recovered in pursuance of the quashed order shall remain subject to the outcome of the fresh adjudication to be conducted in accordance with law.
Conclusion:
The High Court ruled that if a taxpayer submits a reply to a show cause notice after the due date but before the final order is passed, the tax officer must consider that reply. Ignoring it is unfair and goes against the principles of natural justice. Since the officer in this case passed the order without looking at the reply, the Court set aside that order and asked the officer to pass a new one after properly considering the taxpayer’s reply and giving him a chance to be heard.
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