Personal Hearings in GST: Understanding Your Rights and Legal Procedures

Navigating the Goods and Services Tax (GST) system can be intimidating, particularly when you receive an impending Show Cause Notice (SCN) on your portal. So, understandably, the right to a personal hearing is one of your most significant rights as a taxpayer during this process. Personal hearings are more than just formalities; they are your chance to present evidence, defend your position, and guarantee that any decision is reasonable and fair.
So, let’s break down how personal hearings work under GST law, what the law expects from authorities, and important judicial precedents that protect taxpayers’ rights.

What is a Personal Hearing under the GST Law?

A personal hearing is simply a meeting scheduled by the tax authorities where you, the taxpayer, have the opportunity to make your case and explain any discrepancies mentioned in the SCN by the Tax Authorities. This happens after the issuance of a Show Cause Notice (SCN) under the CGST Act, 2017. The said notice will outline the alleged issue and charges against you. For example, non-payment of GST, discrepancies in returns, or incorrect input tax credit claims, and will propose a penalty, interest, and demand for payment. According to Section 75(4) of the CGST Act, you have the legal right to a personal hearing following the issuance of the SCN before any additional orders are issued.

This step ensures natural justice is followed: you cannot be penalized without being given a chance to be heard.

Some provisions relating to personal hearings in GST are included in a few sections of the Central Excise Act and the CGST Act:

• Section 75(4) of the CGST Act: This provision requires the concerned officer to provide the individual an opportunity to be heard prior to passing any orders.

• Central Excise Act, 1944, Section 33A: Although enacted initially under pre-GST law, Section 33A is still applicable because most of the GST laws relating to adjudication and personal hearings have principles drawn from previous laws.

Personal hearings are compulsory, the law having clearly stated this fact. Tax authorities are meant to act fairly before making any adverse orders and to provide an opportunity for everyone to put across arguments and supporting evidence.

The Procedure for Personal Hearings

One needs to understand the process to safeguard your rights. This is how the procedure normally works:

1. Show Cause Notice (SCN) Issue: The SCN is always the first step in the process. It lists the alleged violations, the relevant legal provisions, and the monetary penalty and tax demand that is being investigated.

2. Fixing of Personal Hearing: Once the SCN is served, the tax officer arranges for a personal hearing. You will be informed of the date, time, and place of the hearing through any official notice.

3. Requests for Adjournment: You could ask for an adjournment if you cannot appear on the given date. Three adjournments are provided for by the law.

4. Evidence and Argument Presentation: You can present supporting documentation, address any ambiguities, and present legal arguments to support your position during the in-person hearing.

5. Final Order: The adjudicating authority issues a reasoned order after considering your submissions. It could uphold the SCN, alter it, or waive it altogether.

Common Mistakes by Authorities: Multiple Hearing Dates in One Notice

One of the most important areas where the authorities have regularly committed procedural flaws is issuing a single notice/letter with more than one hearing date. Courts have consistently held that this is a contravention of the principles of natural justice. Let us consider some notable judicial precedents:

1. Regent Overseas Pvt. Ltd. vs Union of India (Gujarat High Court, 2017)

In this historic judgment, the Gujarat High Court ruled on the question of consolidated hearing notices. The case was raised due to the fact that the tax department issued a single notice with three dates for hearing the same case. The Court ruled that such a practice goes against natural justice, for the following reasons:

• Every adjournment needs to have a separate notice with grounds for extending it.

• Consolidated notices actually bypass the process of recording reasons for each adjournment.

• The taxpayer should be provided with one unambiguous date for the hearing, and further dates need to be fixed only if the taxpayer files a request for adjournment with reasonable grounds.

The Court ruled that serving one notice with several hearing dates fails to meet legal standards, and any order issued based on such a notice is susceptible to challenge.

“It is not permissible for the adjudicating authority to issue one consolidated notice fixing three dates of hearing, whether or not the party asks for time,” the court stated.

2. IND Swift Laboratories vs Commissioner of Central Excise and Service Tax (CESTAT Chandigarh)

In this case, the CESTAT Chandigarh reiterated the importance of proper personal hearings. The authority had passed an ex parte order that is an order without hearing the taxpayer and citing the absence on the scheduled dates as a reason.

The tribunal noted:

• The SCN notice granting three dates in one notice violated natural justice.

• Even if the taxpayer missed those dates, the authority could not automatically assume that three adjournments were granted.

• The proper procedure requires giving one date at a time and recording the reasons for any adjournment.

The tribunal quashed the ex parte order and remanded the case, directing that the taxpayer be heard properly.

3. General Principle: Maximum of Three Adjournments

Sub-section (2) of Section 33A (Central Excise Act) allows for a maximum of three adjournments. In the GST Law, too, such has been agreed and decided by the court. It has thus become a procedural requirement in law eyes.

The first date is the originally fixed hearing.

• If there is a request by the taxpayer for adjournment and there is good cause, the hearing can be shifted up to three times.

• Most importantly, every adjournment necessitates a different date and a documented reason.

• Courts have explained that rendering multiple dates in a single notice cannot be regarded as adjournments, and those notices are regarded as legally defective.

This principle would make the process of adjudication efficient and equitable, avoiding unwarranted delays and safeguarding taxpayers’ rights.

Why Personal Hearings Matter?

Personal hearings are not a formality, but they act as key safeguards in GST enforcement:

1. Safeguarding Legal Rights: In the absence of a personal hearing, officials can make orders that are unjust or without proper information. The hearing gives you a chance to bring evidence and make your case.

2. Transparency and Accountability: Officials must note reasons for adjournment and for the final order for ensuring accountability.

3. Chance of Settlement: Personal hearings give a chance to clear misunderstandings, negotiate, or settle issues before escalation to fines or court cases.

What To Do?

1. Respond at Once: Always respond to the SCN and personal hearing notice. Failure to do so can result in ex parte orders.

2. Ask for Adjournments Wisely: If you require additional time, ask for it in writing and provide the reason. Remember, only three adjournments are allowed at most.

3. Prepare Carefully: Get all invoices, GST returns, and related documents ready well in advance of the hearing.

4. Get Professional Assistance: Tax consultants or lawyers can assist you in making your case stronger and ensuring procedural compliance.

5. Challenge Procedural Flaws: If the authority issues a notice with several dates or goes against procedural standards, this can be challenged on natural justice grounds.

Conclusion

Personal hearings in GST are a taxpayer’s right at the core, assuring no order is made without affording a reasonable chance to be heard. The law strictly caps the number of adjournments and requires each date of hearing to be separately issued with reasons recorded. Judicial precedents like Regent Overseas Pvt. Ltd. and IND Swift Laboratories affirm that tax authorities have to strictly adhere to these procedures.

For taxpayers, knowledge about these rights is important. A personal hearing is not only a ritual, it’s your opportunity to make sure that the GST process is transparent, just, and fair. By being well-prepared, acting swiftly, and understanding the legal framework, you can safeguard your interests well.

Author Details-Apoorva Lamba (3rd Year Student, Madhav Mahavidyalya, Jiwaji University, Gwalior)