GST demand order was set aside as personal hearing was not granted after registration cancellation

Conclusion: Non-service of notice and denial of hearing before adjudication under Section 73 violates Section 75(4) and the principles of natural justice, therefore, the demand order passed ex parte under Section 73 in such circumstances was unsustainable and liable to be set aside.

Held: Assessee was engaged in the business of manufacturing and trading industrial valves, had discontinued its operations in 2021 and its GST registration was cancelled w.e.f. 01.01.2023. Subsequently, the State Tax Officer issued a show cause notice dated 28.12.2023 under Section 73 of the GST Act proposing disallowance of ITC for FY 2018–19 based on discrepancies between GSTR-3B and GSTR-2A/2B. The notice was uploaded on the GST portal after cancellation of registration, of which assessee was unaware. The officer passed an ex-parte order dated 11.03.2024 raising a demand.  Assessee’s appeal was rejected as time-barred by 49 days, leading to the present petition under Article 227. Assessee contended that the order was passed ex-parte without issuing notice of personal hearing as required under Section 75(4), show cause notice was uploaded on the GST portal after registration cancellation; hence, assessee had no knowledge of it and the difference between GSTR-3B and GSTR-2A arose due to the supplier’s clerical error in quoting the wrong GSTIN, later rectified. It was held that since assessee’s registration had been cancelled before issuance of the notice and no opportunity of hearing was provided, the order suffered from violation of principles of natural justice and contravention of Section 75(4) of the GST Act. The matter was remanded back to the adjudicating authority for a fresh (de novo) decision after providing assessee with a proper opportunity to file a reply and be heard.