Summary: Natural Justice, derived from ’Jus Natural’, forms the non-statutory bedrock of fairness in adjudication, resting on two primary rules: Nemo Judex In Causa Sua (no one can be a judge in their own cause, or the rule against bias) and Audi Alteram Partem (hear the other side). The Audi Alteram Partem principle is fundamental, requiring Notice of charges, the Right to Present Case and Evidence, and the Right to Rebut Adverse Evidence, ensuring decisions are not arbitrary. In the context of the Goods and Services Tax (GST), Section 75(4) of the CGST Act, 2017, explicitly mandates a **Personal Hearing (PH) ** in two situations: where the person chargeable with tax or penalty requests it in writing, or, independently, where any adverse decision is contemplated. Judicial precedents from various High Courts, including Eminent Logistics vs. The Assistant Commissioner of State Tax (Calcutta High Court) and Singh Traders v/s The State of Bihar (Patna High Court), have consistently affirmed that the opportunity for a PH is mandatory before passing an adverse order, even without a written request. Any order passed in violation of Section 75(4) is deemed to be a violation of natural justice and is liable to be quashed and remanded for fresh adjudication after granting a proper hearing.
1. Introduction
- Personal hearing (PH) is the bedrock of natural justice in tax administration.
- Principles of Natural Justice are derived from the term ‘Jus Natural’, which generally means the law of nature, and is not derived from any statute or Constitution. It is closely related to the common law and moral principles.
2. Development of Natural Justice in India
- No statute in India lays down the minimum procedure that administrative agencies must follow while adjudicating any matter. In India, the concept developed through Mohinder Gill v. Chief Election Commissioner, wherein it was held that fairness should be in every action, whether it is judicial, quasi-judicial, administrative, or quasi-administrative work.
- The Principles of natural justice are a body of rules that have been evolved over time by the courts in order to preserve the common man’s faith in the justice system. All judicial , quasi-judicial and administrative agencies are bound to follow these principles while-taking any decision that would adversely affect the rights of a private individual.
3. Core Principles of Natural Justice
- Natural Justice is concerned with primary rules. These are:
- Nemo Judex In Causa Sua or that no man can be a judge in his own cause which is also called the rule against bias, and
- Audi Alteram Partem which means that both parties to a cause must be heard.
PRINCIPLE OF NEMO JUDEX IN CAUSA SUA
“Nemo Judex In Causa Sua” literally translates to “no one should be made a judge in their cause.” According to this principle, decision-makers must be impartial and unbiased while deciding the dispute. They should not have any personal or financial interest in the matter being decided, nor should they have any preconceived notions about the parties involved or the subject matter.
This principle is also known as the rule against bias. Bias means any operative prejudice, consciously or unconsciously, by the judge against the party or issue. The rule against bias is broadly based follows two principles:
- No one should be a judge in his cause.
- Justice should not only be done but also seen to be done explicitly.
The principle of ‘Nemo Judex In Causa Sua’, or ‘Rule against Bias’, focuses on the role of the judge in a hearing. It holds that a judge must be impartial and objective when deciding any dispute.
In any administrative proceedings, these principles play an essential role. Any administrator exercising adjudicatory powers should not have any personal or proprietary interest in the outcome of the proceedings, or there should not be any reasonable ground for believing that there was the likelihood of bias in the given decision.
What is Audi Alteram Partem?
Audi Alteram Partem is a Latin phrase that translates to “hear the other side.” It is a fundamental principle of natural justice that ensures fairness in legal proceedings and administrative actions. This principle requires that all parties involved in a dispute or legal matter should have the opportunity to be heard and present their case before a decision is made.
It is based on the belief that a fair decision can only be reached when all sides of an argument are considered and given a chance to respond. Audi Alteram Partem in Administrative Law is considered a cornerstone of the rule of law and is essential for upholding justice and preventing arbitrary decisions.
Essential Elements of Audi Alteram Partem
The principle of audi alteram partem is a fundamental aspect of natural justice and fair legal proceedings. Its essential elements include:
Notice:
Notice is a fundamental element of natural justice, ensuring that parties are informed of any action proposed against them. It provides individuals with the opportunity to respond and defend themselves. Without proper notice, any subsequent order or decision is considered void ab initio or void from the beginning.
The right to notice is crucial as it allows individuals to understand the facts and charges against them before a hearing. Notice must include essential details such as the date, time and place of the hearing, as well as the jurisdiction under which the case is filed. Additionally, it should clearly state the charges and proposed actions against the individual. Failure to include any of these details renders the notice invalid.
Hearing
Fair hearing is another crucial aspect of the principle of audi alteram partem, ensuring that parties have the opportunity to present their case and be heard before any decision is made. If an authority passes an order without giving the affected party a fair hearing, the order is considered invalid.
Evidence
Evidence is a critical component of any legal proceeding and it must be presented when both parties are present. The judicial or quasi-judicial authority will base its decision on the evidence presented before it.
Cross-examination
Cross-examination is a vital aspect of the legal process, allowing parties to challenge evidence presented against them without necessarily revealing the identity of the person providing the evidence. While the court is not obligated to disclose the identity of the person or the material against them, the opportunity for cross-examination must be provided.
One of the sine qua non-principles of every civilized society, the right to a hearing, passes through various stages, from notice to final determination. Therefore, the right to hearing encompasses the following concepts within its ambit:
- Right to notice
- Right to present case and evidence
- Right to rebut adverse evidence
- Right to cross-examination
- Right to legal representation
- Disclosure of evidence to the party
- Showing the report of enquiry to the other party
- Reasoned decisions or speaking orders
4. Personal Hearing under GST
- Under GST, disputes often involve large tax demands, penalties, and cancellation of registration, making PH a crucial safeguard.
Section 75(4) of the CGST Act, 2017:
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.
According to this section opportunity of hearing shall be granted in following two situations:
i. When the person makes a specific request for personal hearing in writing or
ii. When an adverse decision is contemplated against the person concern.
Both situations are independent from the each other.
5. Judicial Prouncements Affirming PH Requirement:
In case of Eminent Logistics vs. The Assistant Commissioner of State Tax, Ballygunge Charge & Ors the Hon’ble Calcutta High Court held that
Matter Involved: “The petitioner received a show-cause notice but was not granted a personal hearing before the final order under Section 73 was passed. Although no written request for hearing is made, the Court held that the opportunity is mandatory where an adverse decision is contemplated. The final order is quashed and the matter is remanded for fresh decision after hearing”.
Held by Court: Opportunity of hearing under Section 75(4) is mandatory if an adverse order is to be passed, even with
out a written request. The order dated 28th May, 2025 is set aside, and the matter remanded for disposal afresh with personal hearing, without allowing fresh written response.
In case of Singh Traders v/s The State of bihar the Hon’ble Patna High court held that
“Matter Involved: The assessee challenged the demand raised through DRC-07 without being granted a personal hearing as required under Section 75(4) of the Cgst act.
Held by Court: The High Court held that the impugned demand violated Section 75(4) as no opportunity for personal hearing was given. Relying on an earlier Division Bench ruling, the Court quashed the order and remitted the matter to the Assessing Officer for fresh adjudication after granting the assessee an opportunity of hearing.
In case of Sri Sai Vishwas polymers.. vs Deputy Commissioner the Hon’ble Uttarakhand High Court held that:
Held by Court: The High Court held that personal hearing under Section 75(4) is mandatory in case of adverse decisions. The assessment order passed without such hearing is violative of natural justice.
In case of Singla traders vs State of Punjab and others the honble Punjab and Haryana high court held that
“Held by Court: The Court found clear violation of Section 75(4), which mandates personal hearing where adverse decision is contemplated and written request is made. The impugned order is set aside and the matter remanded for passing a fresh order after giving the petitioner opportunity of personal hearing.
In case of Integra Micro Systems Private Limited Lko. vs State of U.P. the Hon’ble Allahabad High Court held that
“Matter Involved: The petitioner contested the demand order, citing non-compliance with Section 75(4), which mandates a personal hearing before an adverse decision. The court noted the absence of hearing dates and details in the notices, rendering the proceedings invalid.
Held by Court: The court quashed the GST demand and appellate orders, holding that denial of a personal hearing violated the principles of natural justice and Section 75(4) of the GST Act. It remanded the matter for fresh adjudication with an opportunity for the petitioner to file a reply and participate in the proceedings”.
In case of Singh Traders v/s The State of Bihar the Hon’ble Patna High Court held that:
“Matter Involved: The petitioner challenged the assessment order alleging no opportunity of personal hearing was provided under Section 75(4), rendering the order unsustainable under law and violative of natural justice”.
Held by Court: Court quashed the impugned order and remitted the matter to the Assessing Officer with directions to provide personal hearing and pass a fresh order within three months or available limitation period.
Conclusion
Personal Hearing is not a procedural formality but a constitutional safeguard ensuring fairness, accountability, and transparency in GST adjudication. As courts have reiterated, any deviation from this mandate strikes at the root of natural justice and makes the proceedings unsustainable. Therefore, all stakeholders—taxpayers and authorities alike—must treat the personal hearing as a crucial, enforceable right, upholding the rule of law and the integrity of tax administration.
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