Three personal hearings under GST law, Goods and Services Tax - GST

[SUSHIL BANSAL]

Dear experts

usually central GST officers provide 3 opportunities/Personal hearings in every case but usually state GST officers do not follow this.Experts plz guide what are the actual law position regarding three personal hearings.

Posts / Replies

[KASTURI SETHI]

The term, 'three adjournments' mean four opportunities four personal hearing as per Section 75 (5) of CGST Act. To grant personal hearing is mandatory for the adjudicating authority as per Section 75 (4). It is mandatory for both CGST and SGST Officers. If not granted, the Adjudicating Order be in violation of statutory provisions as well as principles of natural justice. There is a plethora of  various High Court judgements wherein the Adjudication Order were set aside because of non-granting opportunity for P.H. 

[Sadanand Bulbule]

Absolutely right Sir

[Shilpi Jain]

3 opportunities should be provided and they cannot be given just for formality sake. It should be given genuinely in such a way that the person can attend.

In one case the notice was issued and 2 days later the PH was given. In that itself 3 dates were mentioned close to each other. The HC mentioned that this kind of formality sake PH given is not right in law and quashed the order.

[KASTURI SETHI]

Three adjournments means four opportunities for personal hearing to be fixed.----Held by Delhi High court.

It is worthwhile to mention that language of  proviso to Section 75 (5) of CGST Act and proviso to Section 33A of Central Excise Act  regarding three adjournments remains the same. 

Proviso to Section 75 (5) of CGST Act

"Provided that no such adjournment shall be granted for more than three times to a person during the proceedings."

Proviso to Section 33 A of Central Excise Act

Provided that no such adjournment shall be granted more than three times to a party during the proceeding.]

 Since same language has been carried forward in CGST Act, so the Delhi High Court judgement  is  relevant and applicable to the GST regime

2017 (3) TMI 557 - GUJARAT HIGH COURT - REGENT OVERSEAS PVT. LTD. Versus UNION OF INDIA

[haribabu koduri]

In general, State GST officers are not inclined to give three adjournments. Most of the inspectors/officers carrying out assessment/audit work, barring very few, do not study the provisions in detail. They do not go through judicial pronouncements. In many of the States, they give one or two adjournments and after that simply pass orders stating that the tax payer has been given enough oppoirtunities but not utilised the same. All the State Commissioners should issue circulars stating that the tax payers should be allowed four hearings in total.

In some of the cases, CGST officers are issuing hearing notices, mentioning therein three personal hearing dates, which is also not correct. Already there are judgements by High Courts that granting three hearings in the same notice is not proper. But, administration is not bothered. 

[KASTURI SETHI]

If any adjudicating authority does not grant three adjournments (four personal hearings) which are mandatory as per Section 75 (5) of CGST Act, that will be in violation of principles of natural justice. The department will have no answer, if the party challenges the Order on this very basis before the next Appellate Authority/CESTAT/GST Tribunal/High Court. The possibility of passing strictures against the Adjudicating Authority cannot be ruled out. 

[k.lakshmipati rao]

Thanks to all Experts.

In all cases where personal hearing has been concluded, it is necessary to issue Adjudication order and communicate the decision as expeditiously as possible, but not later than ONE month in any case, as per CBIC guidelines Master Circular No.1053/2/2017-CX, 10-03-2017 [F.No.96/1/2017-CX.I]- [Para- 14.10]. The order is required to be communicated to the assessee in terms of provisions of Section 37C of the CEA, 1944. 

Kindly confirm whether the above circular guidelines equally applicable even under GST Law or not. If not, what would be the relevant Section/Rule under the provisions of GST Law and/or CBIC circulars thereof, if any.

[KASTURI SETHI]

Sh. K. Lakshmipati Rao Ji,

This is with reference to your above post at serial no.7.

The Circular No. 1053/2/2017-CX. dated 10.03.2017 is not applicable in GST regime inasmuch as a circular must synchronize with respective Act. In Central Excise era, a Circular No. 732/48/2003-CX dated 5.8.2003 was also issued in this context. In Central Excise period there was an element of 'discretion' regarding time limit for issue of adjudication order which has been done away with in CGST Act. In Section 11A of Central Excise Act, there was wording, 'where it is possible'.

In circular dated 5.8.2003, after the conclusion of personal hearing, it was necessary to communicate the decision immediately or within a reasonable time of 5 days or 15 days or 30 days. Practically, the situation was altogether different.

Now in GST Acts, the adjudicating authority is statutorily bound to issue adjudication order within time limit fixed under Section 73 (10), 74 (10) and 74A (7) of CGST Act. That is why no circular has been issued so far in this context.

[Sadanand Bulbule]

True Sir. Under the GST regime, there is “ sunset “ clause for every communication/ decision/ order. The power of “ discretion”  vested in the authorities has been taken away to ensure punctuality, accountability and responsibility. 

[k.lakshmipati rao]

Thank you, Shri. Kasturi Sethi Ji, for your confirmation. In fact, I too have similar view but thought of having validation from Experts, like you.

The reason why I raised the query was that I have attended the PH on 23-11-2023 relating to one of our group company, however, the Adjudication order dt.17-01-2025 was communicated to us on January 24, 2025 [6:57 PM], after a lapse of 14 months from the date of PH.

Thank you, once again.

[KASTURI SETHI]

Dear Sir,

I do not consider myself as an expert in GST. I am really highly thankful to you for your inspirational and motivational words.

[SUSHIL BANSAL]

Dear experts

75(4) 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.

My  point is whether the SCN as issued will be treated as opportunity of being heard or hearing/PH in addition to the SCN will be treated as opportunity of being heard. 

(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, 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.

My point is, if taxpayer does not seek any adjournment or the taxpayer does not file any reply of the SCN then still the department is bound to give three PH ?.However the language of the law does not support this view.

However in the SGST department software I have seen option of "Reminder 1", "Reminder 2" , "Reminder 3" are showing, but the language of the law should support our view point.

[KASTURI SETHI]

Q.1 : Whether the SCN as issued will be treated as opportunity of being heard or hearing/PH in addition to the SCN will be treated as opportunity of being heard. 

Reply : Both SCN and P.H. letter  are opportunities for Noticee to defend their interest.   Both are integrally related. The date of P.H. can be mentioned either in the SCN itself or in a separate letter for P.H.SCN cannot be adjudicated without P.H., if decided, that will be in violation of principles of natural justice. P.H. is mandatory even if the Noticee/assessee says., 'NO'-----Allahabad High Court in the case of Mohini Traders - 2023 (6) TMI 531 - ALLAHABAD HIGH COURT. TMI Issue ID : 438957

Q. No.2 If taxpayer does not seek any adjournment or the taxpayer does not file any reply of the SCN then still the department is bound to give three PH ?.However the language of the law does not support this view.

Reply :  YES. The department is bound. Not three but four dates of P.H. P.H. is an absolutely must, if adverse decision is to taken.

[SUSHIL BANSAL]

Tysm sir for your expert opinion.

I am taking the view that 3 PH is mandatory as per the Allahabad High Court in the case of Mohini Traders - 2023 (6) TMI 531 - ALLAHABAD HIGH COURT. however the GST law does not so provide. Plz guide further if you have different opinion.

[Sadanand Bulbule]

Dear

The ratio of proviso to Section 107[9] may be applied for three PH as well.

[KASTURI SETHI]

Dear Querist,

You are talking of Section 75 (4) whereas I am talking of Section 75 (5). In the case law of Mohini Traders not even a single opportunity for P.H. was given to the party by the Adjudicating Authority.

As per Section 75 (5) maximum opportunities are four and not three. The phrase, ""Three adjournments" means three postponements and hence four opportunities. It is very simple to understand.

The language of proviso to Section 107 (9) and Section 75 (5) is the same. The Adjudicating Authority as well as Appellate Authority both must grant four opportunities for personal hearing.

"For granting three adjournments four dates of personal hearing required to be fixed and not three as it would amount to grant two adjournments only and not three - Impugned order quashed. [paras 11, 12, 13, 14]" --Gujrat High Court in the case of Regent Overseas Pvt. Ltd. - 2017 (3) TMI 557 - GUJARAT HIGH COURT.

For granting four opportunities for P.H, language of Section 33A of Central Excise Act and language of Section 75 (5) and Section 107 (9) CGST Act is the same. Hence above judgement pertaining to Central Excise Act is equally applicable to GST Act.

[Sadanand Bulbule]

Very effective comparison Sir. 

[KASTURI SETHI]

Dear Sir,

             Your validation means final touch to my reply. Thanks a lot.