Madras High Court Ruling: Order Passed Without Considering Reply and Personal Hearing Liable to Be Remanded for Fresh Adjudication

In a recent ruling, the Madras High Court reaffirmed the importance of adherence to principles of natural justice in tax adjudication. The Court held that any order passed without considering the assessee’s reply or providing an opportunity for personal hearing is unsustainable in law and must be set aside. The judgment emphasized that quasi-judicial authorities are bound to follow due process, especially when statutory provisions or SCNs (Show Cause Notices) explicitly mention the right to respond and be heard. This decision underscores judicial insistence on procedural fairness and ensures that the rights of taxpayers are safeguarded during adjudication.

🏛️ Case Details

Case Title: M/s Shree Balaji Enterprises v. Joint Commissioner of GST & Central Excise
Court: Madras High Court
Date: Early July 2025 (reported 4–5 July 2025)
Context: The petitioner (Shree Balaji Enterprises) challenged a GST assessment order passed without considering their reply to the Show Cause Notice (SCN) and without granting a requested personal hearing.


🔍 Facts of the Case

  • The taxpayer received an SCN and submitted a detailed reply via email, addressing each allegation.
  • A formal request was also made for a personal hearing, as allowed under Rule 92(3) of the CGST Rules.
  • Despite both, the adjudicating authority finalized the assessment order without acknowledging the reply or hearing the petitioner’s oral submissions.

⚖️ Legal Issues Raised

  1. Was the assessment order valid when the taxpayer’s reply was ignored?
  2. Did skipping the personal hearing, though formally requested, violate natural justice?
  3. Did these procedural lapses justify setting aside the order and remanding it for a fresh adjudication?

🧭 Court’s Analysis & Observations

  • The High Court underscored principles of natural justice—specifically the right to be heard and to present a reply before any adverse decision.
  • The Court noted that the SCN explicitly required a reply, but the final order made no reference to it, making the order non-speaking and lacking in.
  • Equally important was the failure to conduct a requested personal hearing, which the Court found to be a violation of procedural fairness .

🧾 Court’s Decision

  • The Court set aside the assessment order entirely.
  • It remanded the matter to the GST authority with clear directives:
    1. Consider the petitioner’s submitted reply on its merits.
    2. Grant a personal hearing to the petitioner.
    3. Issue a fresh, speaking order, addressing each point raised, within a reasonable timeframe.

This approach ensures compliance with procedural safeguards and prevents mechanical decision-making.


🌟 Implications & Takeaways

  • Procedural rights are substantive rights: Under GST law, the right to reply and be heard is not a mere formality—it is essential.
  • Non-speaking orders are vulnerable: Orders that fail to address taxpayer submissions can be invalidated as they do not reflect the decision-maker’s mind.
  • Requests for hearing must be honored: Denial of a personal hearing—even if requested after the SCN—is a violation of natural justice.
  • Tax authorities must apply mind and record reasons: Fresh adjudications should be transparent and reasoned, addressing each argument raised by the taxpayer.

📌 Role for Tax Professionals & Taxpayers

  • Emphasize the importance of submitting replies and formally requesting personal hearings during assessment proceedings.
  • On receipt of an adverse order, check if it is non-speaking (does not reference your submissions) or if a hearing was denied.
  • Consider writ petitions under Article 226 as a remedy when procedural fairness is compromised.
  • Implement checklists and workflows to ensure no opportunity for reply or oral hearing is missed in practice.

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