Gujarat High Court
M/S Aarya Metals vs The State Of Gujarat on 28 July, 2026
Author: A.S. Supehia
Bench: A.S. Supehia, Vaibhavi D. Nanavati
NEUTRAL CITATION
C/SCA/7535/2026 JUDGMENT DATED: 28/07/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7535 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Sd/-
=============================================
Approved for Reporting Yes No
✔
=============================================
M/S AARYA METALS & ORS.
Versus
THE STATE OF GUJARAT & ANR.
=============================================
Appearance:
MR ABHAY Y DESAI(12861) for the Petitioner(s) No. 1,2,3
MS NIMISHA PAREKH, AGP for the Respondent(s) No. 1,2
=============================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 28/07/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. Rule. Learned Assistant Government Pleader waives
service of notice of Rule on behalf of the respondents.
2. At the outset, learned advocate Mr.Abhay Y. Desai,
appearing for the petitioners has submitted that the issue
involved in the present petition is squarely covered by the
decision of this Court in the case of Aarti Enterprise Vs. State of
Gujarat, (2026) 39 Centax 31 (Gujarat).
3. Learned Assistant Government Pleader Ms.Nimisha
Parekh, was unable to controvert the aforesaid proposition.
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4. A short issue involved in the present writ petition pertains
to the absence of intimation regarding the date, time and
venue of personal hearing in the show-cause notices issued to
the petitioners, which ultimately culminated in the impugned
order.
5. The respondent-Commissioner issued a show-cause
notice dated 04.08.2024 under Section 74(1) of the Central
Goods and Services Tax Act, 2017 (for short, “the CGST Act“),
seeking to recover Input Tax Credit (ITC) of Rs.7,63,026/- along
with applicable interest under Section 50 of the CGST Act. It
was alleged that the inward supplies received from M/s.RK
Battery and Scrap were non-genuine, as the supplier was
found to be a non-genuine and non-existent taxpayer.
Consequently, the ITC was alleged to be inadmissible under
Section 16(2) of the CGST Act.
6. It is the case of the petitioners that they were never
aware of the aforesaid show-cause notice. Thereafter, the
respondent authorities issued three reminders dated
12.09.2024, 07.11.2024, and 18.11.2024. The petitioners
submitted a reply dated 21.11.2024 along with the tax invoices
issued by the supplier. However, the respondent authorities
proceeded to pass the impugned order dated 07.12.2024 in
FORM GST DRC-07.
7. It is submitted that the impugned order deserves to be
quashed and set aside since neither the show-cause notice nor
the subsequent reminders specified the date, time, or venue of
personal hearing. It is further submitted that the reminders
also reflected “N.A.” against the particulars of the date, time,
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and venue of personal hearing, thereby depriving the
petitioners of an effective opportunity of hearing. It is further
submitted that the impugned order is a non-speaking, one-line
order and is liable to be quashed in light of the decision of this
Court in the case of Aarti Enterprise (supra).
8. Opposing the writ petition, learned AGP Ms. Nimisha
Parekh has submitted that the petitioners were issued three
reminders. She has further submitted that although the
petitioners had responded to the proceedings, they had
selected “No” in the column relating to personal hearing and
they were fully aware of the proceedings. Hence, she has
submitted that the writ petition does not deserve to be
entertained.
9. From the pleadings on record, the following facts emerge:
A. The petitioners were initially issued a show-cause
notice dated 04.08.2024 under Section 74(1) of the CGST
Act seeking recovery of ITC amounting to Rs.7,63,026/-.
B. The show-cause notice did not specify the date, time,
or venue of personal hearing.
C. The respondent authorities thereafter issued three
reminders dated 12.09.2024, 07.11.2024, and
18.11.2024, which also failed to specify the date, time, or
venue of personal hearing.
10. It appears that the petitioners thereafter filed a reply in
FORM GST DRC-06 on 21.11.2024, wherein they had selected
“No” against the column relating to personal hearing.
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Thereafter, the respondent authorities passed the two line
impugned order directing recovery of the aforesaid amount
along with interest and penalty.
11. At this stage, it would be apposite to refer to the decision
of this Court in the case of Aarti Enterprise (supra),
wherein, on an identical issue, this Court has held as under:
“5.1 Thereafter, the petitioner has been issued reminders on
31.12.2024, 08.01.2025 and 17.01.2025, three reminders as
required under the provisions of Section 75(5) of the G.S.T Act. On a
bare perusal of the same, it is revealed that the petitioner is not
intimated of either the date, time or venue of personal hearing and
thereafter the impugned order is passed by recording that though
an ample opportunity was granted to the petitioner to remain
present, he has not remained present. This is the only reason which
is assigned in the impugned order. It is not in dispute that three
opportunities are required to be given and as per provisions of
section 75(5) of the G.S.T Act, three adjournments are required to
be given. Section 75 of the G.S.T Act reads as under:
“Section 75. General provisions relating to determination of
tax.-
(1) Where the service of notice or issuance of order is stayed
by an order of a court or Appellate Tribunal, the period of
such stay shall be excluded in computing the period specified
in sub-sections (2) and (10) of section 73 or sub-sections (2)
and (10) of section 74 [or sub-sections (2) and (7) of section
74A], as the case may be.
(2) Where any Appellate Authority or Appellate Tribunal or
court concludes that the notice issued under sub-section (1) of
section 74 is not sustainable for the reason that the charges
of fraud or any wilful-misstatement suppression of facts to
evade tax has not been established against the person to
whom the notice was issued, the proper officer shall
determine the tax payable by such person, deeming as if the
notice were issued under sub-section (1) of section 73.
[(2A) Where any Appellate Authority or Appellate Tribunal or
court concludes that the penalty under clause (ii) of sub-
section (5) of section 74A is not sustainable for the reason
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that the charges of fraud or any wilful-misstatement or
suppression of facts to evade tax has not been established
against the person to whom the notice was issued, the penalty
shall be payable by such person. under clause (1) of sub-
section (5) of section 74A].
(3) Where any order is required to be issued in pursuant of
the direction of the Appellate Authority or Appellate Tribunal
or a court, such order shall be issued within two years from
the date of communication of the said direction.
(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.
(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.
(6) The proper officer, in his order, shall set out the relevant
facts and the basis of his decision.
(7) The amount of tax, Interest and penalty demanded in the
order shall not be in excess of the amount specified in the
notice and no demand shall be confirmed on the grounds
other than the grounds specified in the notice.
(8) Where the Appellate Authority or Appellate Tribunal or
court modifies the amount of tax determined by the proper
officer, the amount of interest and penalty shall stand
modified accordingly, taking into account the amount of tax
so modified.
(9) The interest on the tax short paid or not paid shall be
payable whether or not specified in the order determining the
tax liability.
[(10) The adjudication proceedings shall be deemed to be
concluded, if the order is not issued within the period
specified in sub-section (10) of section 73 or in sub-section
(10) of section 74 or in sub-section (7) of section 74A.
(11) An issue on which the Appellate Authority or the
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Appellate Tribunal or the High Court has given its decision
which is prejudicial to the interest of revenue in some other
proceedings and an appeal to the Appellate Tribunal or the
High Court or the Supreme Court against such decision of the
Appellate Authority or the Appellate Tribunal or the High
Court is pending, the period spent between the date of the
decision of the Appellate Authority and that of the Appellate
Tribunal or the date of decision of the Appellate Tribunal and
that of the High Court or the date of the decision of the High
Court and that of the Supreme Court shall be excluded in
computing the period referred to in subsection (10) of section
73 or sub-section (10) of section 74 [or sub-sections (2) and
(7) of section 74A] where proceedings are initiated by way of
issue of a show cause notice under the said sections.
(12) Notwithstanding anything contained in section 73 or
section 74 [or section 74A], where any amount of self-
assessed tax in accordance with a return furnished under
section 39 remains unpaid. either wholly or partly, or any
amount of interest payable on such tax remains unpaid the
same shall be recovered under the provisions of section 79
[Explanation.-For the purposes of this sub-section, the
expression “self-assessed tax shall include the tax payable in
respect of details of outward supplies furnished under section
37, but not included in the return furnished under section 39.]
(13) Where any penalty is imposed under section 73 оr
section 74 [or section 74A], no penalty for the same act or
omission shall be imposed on the same person under any
other provision of this Act.”
5.2 We are of the considered opinion that in case the aforesaid
details of personal hearing are not incorporated in the notice DRC
01, before final order is passed against the assessee, he is required
to be intimated the date, time and venue of personal hearing. We
further clarify that respondents are not in fact required to issue
Show Cause Notice calling upon him, but they are required to
intimate the date, time and venue of personal hearing.
5.3 The second ground on which the impugned order is required to
be set aside is that the same is absolutely an unreasoned order as
though, the petitioner has remained absent in the proceedings,
however, the same cannot absolve the State Tax Officer in passing
the reasoned order after considering all the materials.
6 Hence, the writ petition succeeds. The impugned order dated
05.02.2025 issued by the respondent No.2 and subsequent
proceedings arising from the impugned orders are hereby quashed
and set aside. The matter is remanded to the jurisdictional State Tax
Officer. He shall pass a fresh order after affording an opportunity of
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hearing to the petitioner an in accordance with law within a period
of 12 weeks from the date of receipt of certified copy of this order.
Rule is made absolute accordingly with no orders as to costs. ”
12. We may also refer to the decision of this Court in the
case of Komal Jayeshbhai Hemavat vs. State Tax Officer,
(2026) 185 taxmann.com 500 (Gujarat), wherein this Court set
aside an order passed under Section 75(4) of the CGST Act
even though the assessee had selected “No” in the column
relating to personal hearing. The relevant observations read as
under:
7. It was incumbent upon the authority to follow the mandate of
Section 75(4) of the GST Act and grant opportunity of further
hearing. This Court in the decision in the case of M/s. Yadav Trailor
Transport Co. Vs. Union of India And Ors., rendered in Special Civil
Application No. 3027 of 2025, has held as under:
” 9.1 It has been categorically observed by this Court in the
case of Regent Overseas Pvt Ltd (supra), that when three
dates had been granted, it would tantamount to
adjournments. However, the provisions of Sub-section (2) of
Sec.33A of the Act provides for three adjournments,
therefore, that would amount to 4 days and 3 adjournments.
For ready reference, the observations made by this Court in
the case of Regent Overseas Pvt Ltd (supra), are reproduced:
“12. Another aspect of the matter is that by the notice
for personal hearing three dates have been fixed and
absence of the petitioners on those three dates apepars
to have been considered as grant of three
adjournments as contemplated under the proviso to
sub-section (2) of section 33A of the Act. In this regard,
it may be noted that sub-section (2) of section 33A of
the Act provides for grant of not more than three
adjournments, which would envisage four dates of
personal hearing and not three dates, as mentioned in
the notice for personal hearing. Therefore, even if by
virtue of the dates stated in the notice for personal
hearing it were assumed that adjournments were
granted, it would amount to grant of two adjournments
and not three adjournments, as grant of three
adjournments would mean, in all four dates for
personal hearing.
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13. As discussed hereinabove, in view of the fact that
the notice for personal hearing was not served upon
the petitioners in accordance with law, no one could
remain present for personal hearing on behalf of the
petitioners on the dates specified in the notice and the
adjudicating authority has proceeded on the footing
that three adjournments have been granted and has
passed the impugned ex parte order Such order is,
therefore, clearly in breach of the principles of natural
justice warranting interference by this court in exercise
of powers under Article 226 of the Constitution of
India.”
9.2 In wake of such submissions, the Order-in-Original is passed
against the settled legal position and in breach of principles of
natural justice.
9.3 It is not in dispute that the petitioner was not heard before
passing of the Assessment Order. It is fundamental proposition of
law that other side should be heard before any order is passed. The
maxim of Audi Alteram Partem is broad enough to include the rule
against bias since a fair hearing is must for it to be unbiased
hearing. The essential ingredients of fair hearing is that a person
should be served with a proper notice and should be given a right to
hearing. 10 For the foregoing reasons, the impugned Order-in-
Original dated 31.03.2023 passed under the Finance Act, 1994, as
well as the Order-in- Appeal dated 25.06.2024 is hereby quashed
and set aside and the matter is remanded back to the Adjudicating
Authority to de novo hear the petition and decide the same in
accordance with law after affording adequate opportunity of hearing
to the petitioner. Such exercise shall be completed within a period of
12 weeks from the date of receipt of copy of this order.
It is clarified that this Court has not gone into merits of the matter.
Rule is made absolute to the aforesaid extent. No order as to costs.”
8. As per the provisions of Section 75(4) of the GST Act, the
respondents are supposed to grant three opportunities of personal
hearing before passing any adverse orders. Hence, the stand
remains uncontroverted.
9. Accordingly, the writ petition is allowed. The impugned order is
hereby quashed and set aside. The matter is remanded back to the
respondent authorities to pass a fresh order within a period of 12
weeks. Rule is made absolute. No order as to costs.”
13. Thus, the impugned order deserves to be quashed and
set aside on three grounds: first, the failure of the respondent
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authorities to intimate the date, time, and venue of personal
hearing; second, the passing of a non-speaking order; and
third, the failure to afford the petitioner three opportunities of
personal hearing as contemplated under Section 75(4) of the
CGST Act.
14. Accordingly, the writ petition succeeds. The impugned
order is quashed and set aside and the matter is remanded to
the jurisdictional State Tax Officer, who shall pass a fresh order
after affording the petitioners an opportunity of hearing in
accordance with law, within a period of twelve weeks from the
date of receipt of the certified copy of this order. Rule is made
absolute to the aforesaid extent.
15. It is clarified that since the impugned order has been set
aside, the petitioners’ claim for refund along with interest shall
remain subject to the fresh order that may be passed by the
respondent authority after considering the defense that may
be raised by the petitioners in the remanded proceedings.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(VAIBHAVI D. NANAVATI,J)
MAHESH/127
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