In the last few years, many GST taxpayers have faced a strange situation — replies were filed on the portal, documents were uploaded, and yet demand orders suddenly appeared, without any real hearing or discussion.

For businesses, this is not just frustrating — it affects cash flow, credibility, and peace of mind.

The reassuring part is this: High Courts across India are consistently quashing such GST orders where the principles of natural justice are violated. Courts are not siding with tax evasion — they are siding with fairness.

Violation of Natural Justice- No Hearing, No Reasoned OrderGST Registration Cancellation Set Aside for Violation of Natural Justice

Brief Legislative Background of the Subject Matter

Under the GST regime, tax authorities are empowered to issue show cause notices and pass adjudication orders mainly under Sections 73 and 74 of the CGST Act, 2017.

Over time, with:

• faceless adjudication,
• portal-based replies, and
• pressure to meet revenue targets,

many proceedings became mechanical. In several cases:

• replies were ignored,
• hearings were not granted,
• orders were passed in a template format.

This led to a wave of writ petitions — and the courts responded firmly.

Brief Overview of Section 73 and Section 74 of the CGST Act

Under the Central Goods and Services Tax Act, 2017, Sections 73 and 74 deal with demand and recovery of tax or input tax credit wrongly availed or utilised.

Though both sections deal with tax demands, the key difference lies in the nature of default.

---

Section 73 – Cases Not Involving Fraud

Section 73 applies where tax has not been paid, short paid, or ITC has been wrongly availed without fraud, wilful misstatement, or suppression of facts.

Key Features:

• Applies to genuine or bonafide errors
• Lower penalty exposure
• Notice generally issued within prescribed time limit (3 years)
• Opportunity to pay tax before or after notice to reduce penalty

👉 This section covers procedural mistakes, classification disputes, calculation errors, etc.

---

Section 74 – Cases Involving Fraud or Suppression

Section 74 applies where non-payment or wrong ITC is due to:

• Fraud
• Wilful misstatement
• Suppression of facts with intent to evade tax

Key Features:

• Serious cases involving alleged intention to evade tax
• Higher penalty (up to 100% of tax)
• Longer limitation period (5 years)
• Stricter proceedings

👉 This section is invoked in cases of alleged tax evasion or deliberate concealment.

---

Core Difference Between Sections 73 & 74

Particulars	Section 73	Section 74
Nature of Default	Bonafide error	Fraud / Suppression
Limitation Period	3 years	5 years
Penalty	Lower	Up to 100%
Severity	Procedural	Serious allegations

Section 74A – Replacement of Sections 73 & 74

Through recent amendments, Section 74A has been introduced to replace Sections 73 and 74 for demands relating to periods from FY 2024-25 onwards .

Earlier position:

• Section 73 → Non-fraud cases
• Section 74 → Fraud / suppression cases

Now:

👉 Section 74A consolidates both types of cases into a single provision.

---

What Section 74A Does

Section 74A now covers:

• Tax not paid
• Tax short paid
• Erroneous refund
• ITC wrongly availed or utilised

Irrespective of whether it involves fraud or not.

However:

• Penalty provisions still differ depending on the nature of default
• The limitation framework has been rationalised

---

Important Point for Your Natural Justice Blog

Even though Sections 73 and 74 are being replaced:

✔ Proceedings under Section 74A are still quasi-judicial
✔ Section 75 procedural safeguards continue to apply
✔ Opportunity of hearing under Section 75(4) remains mandatory
✔ Speaking order requirement under Section 75(6) still applies

So your natural justice argument remains fully valid, only the section reference changes.

---

It is pertinent to note that Sections 73 and 74 have now been replaced by Section 74A for specified tax periods. However, adjudication proceedings under Section 74A continue to be quasi-judicial in nature and remain subject to the procedural safeguards prescribed under Section 75 of the CGST Act. Therefore, principles of natural justice continue to apply with full force.

---

Overview of the Statutory Provisions Interpreted by Courts

The heart of the matter lies in Section 75(4) of the CGST Act, which clearly provides:

Where an adverse decision is contemplated, an opportunity of hearing shall be granted.

This provision applies equally to:

• Section 73 (non-fraud cases)
• Section 74 (fraud / suppression cases)

Courts have repeatedly clarified that electronic proceedings do not dilute statutory safeguards.

Section 75(4) of the CGST Act, 2017 mandates that where an adverse decision is contemplated, or where the taxpayer requests in writing, an opportunity of personal hearing must be granted. The use of the word “shall” makes this requirement mandatory. Courts have consistently held that denial of such a hearing amounts to a violation of principles of natural justice.

Section 75(4) – Opportunity of Hearing

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.

Key takeaway:
The word “shall” makes the grant of hearing mandatory.
If an adverse order is proposed, hearing is not optional.

---

Section 75(5) – Adjournment of Hearing

The proper officer may, if sufficient cause is shown, grant time to the said person and adjourn the hearing for reasons to be recorded in writing, provided that no such adjournment shall be granted for more than three times to a person during the proceedings.

Key takeaway:
Adjournment is discretionary but limited to three occasions.

---

Section 75(6) – Speaking Order Requirement

The proper officer, in his order, shall set out the relevant facts and the basis of his decision.

Key takeaway:
Orders must be reasoned and speaking — not mechanical or template-based.

---

A combined reading of Sections 75(4), 75(5), and 75(6) makes it clear that GST adjudication must be fair, reasoned, and participative. Any departure from these safeguards renders the proceedings vulnerable to judicial scrutiny.

---

Interpretation of These Provisions in Light of Judicial Rulings

High Courts have adopted a very balanced approach:

• They are not deciding tax liability
• They are examining fairness of procedure

The consistent judicial view is:

• Replies must be examined
• Hearings must be meaningful
• Orders must explain why the demand is confirmed

In simple words, GST officers act in a quasi-judicial capacity, not as recovery agents.

Comparative Analysis with Earlier Judicial Approach

Earlier Phase (Initial GST Years)

Earlier, courts showed some tolerance where minor procedural lapses occurred.

• Courts were cautious
• Some procedural lapses were ignored
• Revenue interest was given more leeway

However, from 2024 onwards, High Courts have taken a strict view, holding that:

• Hearing is not an empty formality
• Replies must be dealt with
• Orders must show application of mind

The judiciary has made it clear that revenue interest cannot justify procedural injustice.

Current Phase (2024–2026)

• Courts have become strict
• Even one serious violation is enough
• Non-speaking and ex-parte orders are not sustained

Key GST Case Laws Where Orders Were Quashed for Violation of Natural Justice: Personal Hearing Mandatory Before Passing GST Order – Gujarat High Court Sets Aside Order for Violation of Natural Justice

Santhom Metacast (P.) Ltd. v. Deputy Commissioner of State Tax (Intelligence)

Kerala High Court | 2026

Issue:
GST demand order passed without properly considering the taxpayer’s reply and without granting a meaningful hearing.

Held:
The High Court quashed the order, holding that mere issuance of notice is not enough. Authorities must:

• Consider the reply
• Grant proper opportunity of hearing
• Pass a reasoned (speaking) order

Principle laid down:

Adjudication without effective hearing is a clear violation of Section 75(4) and principles of natural justice.

Mrs. Anjita Dokania v. State Tax Officer (GST)
Calcutta High Court | 2026
Issue:
Order passed mechanically without discussing the taxpayer’s submissions.
Held:
The Court observed that GST authorities cannot act like a “rubber stamp.”
A non-speaking order is legally unsustainable.
Principle laid down:
Failure to deal with the reply of the assessee amounts to denial of natural justice.

Tvl. Baqir Brothers v. Deputy State Tax Officer

Madras High Court | 2026

Issue:
Multiple periods clubbed and adjudicated without granting effective opportunity of hearing.

Held:
The High Court set aside the order and remanded the matter, emphasizing that procedural fairness is mandatory, not optional.

Principle laid down:

Even where tax is payable, procedure prescribed by law must be strictly followed.

Davinder Chicken Centre v. Sales Tax Officer

Delhi High Court | 2026

Issue:
GST order passed ex-parte without giving reasonable opportunity to respond.

Held:
The Court quashed the order, holding that ex-parte adjudication without justification violates natural justice.

Principle laid down:

Convenience of the department cannot override the right to be heard.

Sai Speed Medical Institute Pvt. Ltd. v. Assistant Commissioner (GST)
Madras High Court | 2026
Issue:
Order passed despite reply being filed; no personal hearing granted.
Held:
The Court ruled that when an adverse order is contemplated, personal hearing becomes mandatory under Section 75(4).
Principle laid down:
Portal-based proceedings do not dilute statutory safeguards.

Mahadeo Construction Co. v. Union of India

Allahabad High Court | 2025

Issue:
Demand order passed without reasons and without discussion of facts.

Held:
Order quashed for being non-speaking and arbitrary.

Principle laid down:

A speaking order is the soul of quasi-judicial proceedings.

Quick Reference Table (Readers & Lawyers Love This)

High Court	Core Issue	Court’s Finding
Kerala	No effective hearing	Order quashed
Calcutta	Non-speaking order	Order invalid
Madras	Procedural lapse	Matter remanded
Delhi	Ex-parte adjudication	Order set aside
Allahabad	No reasoning	Order quashed

Core Legal Principles Emerging from These Case Laws

From multiple High Court judgments, these principles clearly emerge:

• Right to be heard is fundamental
• Orders must be reasoned and speaking
• Replies cannot be ignored silently
• Ex-parte orders require strong justification
• Revenue collection cannot override fairness
• Section 75(4) is mandatory
• Non-speaking orders are invalid
• Violation of natural justice vitiates proceedings

In simple words:

No hearing + no reasoning = no valid order

Practical Implications for Directors and Companies

This jurisprudence is extremely useful in real life.

What businesses should do:

• Always reply to GST SCNs
• Specifically request personal hearing
• Preserve portal acknowledgements
• Act promptly against ex-parte orders
• Consider writ remedy where justice is denied

For directors & compliance teams:

• Monitor adjudication timelines
• Document procedural lapses
• Escalate violations early

These judgments are not academic — they are practical shields.

Relief Commonly Granted by Courts

Where violation is established, courts generally:

• Quash the impugned order
• Remand the matter for fresh adjudication
• Direct grant of proper hearing
• Restrain coercive recovery till fresh order

Importantly, courts usually do not decide the tax demand on merits — they restore procedural fairness.

The Way Forward

GST is a technology-driven law, but justice cannot be automated.

For authorities:

• Natural justice is not a formality
• Speaking orders build trust
• Fairness strengthens revenue administration

For taxpayers:

• Awareness of procedural rights is crucial
• Silence or inaction can be costly

Conclusion

The consistent judicial message in 2026 is loud and clear:

Tax may be compulsory, but fairness is non-negotiable.

FAQ

Q1. Can a GST order be passed without a personal hearing?
Only in limited cases. Where adverse decision is proposed and hearing is requested, denial violates natural justice.

Q2. Are ex-parte GST orders valid?
Courts have held that ex-parte orders passed without justified reasons are unsustainable.

Q3. Can High Court quash GST orders without examining merits?
Yes. Courts interfere when procedural fairness is violated.

Q4. Does this apply to Section 73 and 74 both?
Yes. Principles of natural justice apply equally to both sections.

---

Disclaimer

This article is for informational purposes only and does not constitute professional advice. Readers are advised to consult a qualified professional before taking any action.