M/S Shreenath Logistics vs. The State Of Madhya Pradesh

Held

The Court held that the impugned order dated 25.03.2026 (Annexure-P/6) is set aside. The reasoning was based on the admitted position that no opportunity of personal hearing was afforded to the petitioner. The Court found this to be a violation of the principles of natural justice and the mandatory requirement contained in sub-section (4) of Section 75 of the GST Act, which clearly mandates that an opportunity of hearing shall be granted where a request is received in writing or where any adverse decision is contemplated. The Court referred to its own Division Bench order dated 22.01.2024, which reiterated the mandatory nature of granting a hearing. The ratio decidendi is that failure to provide a personal hearing when contemplated or requested, in accordance with Section 75(4) of the GST Act, vitiates the decision-making process. The operative direction was for the respondents to provide an opportunity of hearing to the petitioner by some other officer than the one who issued the show cause notice, and thereafter to pass a final order in accordance with law. The Court explicitly stated that it had not expressed any opinion on the merits of the case. The issue regarding the composite show cause notice and the jurisdiction of the officer was not expressly decided, as the petition was disposed of on the ground of violation of natural justice.

Facts

M/s Shreenath Logistics (petitioner) filed a writ petition challenging an order dated 25.03.2026 passed by Respondent No. 4, and a show cause notice dated 16.05.2024 issued by Respondent No. 3. The show cause notice, in Form DRC-01, covered multiple financial years (2017-18 to 2022-23) and alleged discrepancies. The petitioner submitted a reply on 05.10.2024. Subsequently, Respondent No. 4 passed an order creating a tax demand of Rs. 2,58,72,212/-, interest of Rs. 1,66,59,753/-, and penalty of Rs. 3,75,000/-, aggregating to Rs. 4,29,06,965/-. The petitioner contended that this order was passed without considering their reply, without affording a personal hearing, and by a non-jurisdictional officer, violating principles of natural justice and statutory provisions. The petition also challenged the composite show cause notice for multiple years as impermissible.

Key Issues

1. Whether the impugned order dated 25.03.2026 is liable to be quashed for being passed without affording a proper opportunity of hearing to the petitioner, as mandated by Section 75(4) of the GST Act and principles of natural justice? 2. Whether the composite show cause notice dated 16.05.2024, covering multiple financial years (2017-18 to 2022-23), is impermissible in law under the GST regime? 3. Whether the impugned order dated 25.03.2026 was passed by a non-jurisdictional officer, rendering it illegal? Petitioner's arguments: - The impugned order was passed without affording any opportunity of personal hearing, despite a specific request in the reply, violating Section 75(4) of the GST Act and principles of natural justice. The order was also passed after an inordinate delay of approximately 18 months from the reply. - Issuing a composite/block show cause notice for multiple financial years is impermissible under the GST regime, as held by various High Courts. - The impugned order was passed by a non-jurisdictional officer. - Relied on a Division Bench order of the High Court of M.P. Bench at Gwalior dated 22.01.2024 in W.P. No.15923 of 2023. Revenue's arguments: - The learned Deputy Advocate General fairly submitted that before passing any adverse order, an opportunity of hearing ought to be granted to the petitioner in terms of Section 75(4) of the GST Act.