The Patna High Court has delivered an important judgment in a batch of writ petitions challenging GST assessment orders passed under Sections 73/74 of the CGST/BGST Acts. The petitions—led by CWJC No. 4180 of 2024—raised three broad grounds: (i) that the proceedings were time-barred, (ii) that no prior “scrutiny of returns” notice under Section 61/Rule 99 was issued, and (iii) that the assessing authorities failed to grant a mandatory personal hearing before passing adverse orders. The Court (Hon’ble the Chief Justice K. Vinod Chandran and Hon’ble Mr. Justice Partha Sarthy) rejected the first two objections but accepted the third wherever applicable, setting aside and remanding those orders in which personal hearing was not granted, while dismissing petitions where a hearing had in fact been afforded.
Simplified Explanation of the Judgment
This was a consolidated decision on multiple writ petitions filed by registered persons (the petitioners) against assessment orders issued by State/Central GST authorities in Bihar. The petitioners argued that:
• The assessments were barred by limitation because they were issued beyond the permissible period.
• The department could not invoke Section 73 unless it first scrutinized returns under Section 61 and issued Form GST ASMT-10 under Rule 99.
• Even if the proceedings were maintainable, the authorities violated Section 75(4) by passing adverse orders without giving a personal hearing.
On limitation, the Court surveyed the statutory framework and successive Government notifications that extended the “due date” for filing annual returns under Section 44(1) for FYs 2017-18, 2018-19, and 2019-20. These extensions matter because Section 73’s limitation runs with reference to the “due date” of the annual return for the relevant period. The judgment notes that the due date for 2017-18 in Bihar was extended up to 07.02.2020; for 2018-19, it was ultimately extended to 31.12.2020; and for 2019-20, to 31.03.2021 (after a series of notifications). The Court further recorded that the Supreme Court’s suo motu orders excluding the period from 15.03.2020 to 28.02.2022 for limitation operate within these three-year windows. Result: the impugned assessments were not time-barred.
Specifically, the Court reasoned that, considering the extended annual-return due dates and the Supreme Court’s exclusion of time during the pandemic, the three-year limitation for FY 2017-18, 2018-19, and 2019-20 fell on 07.02.2023, 31.12.2023, and 31.03.2024 respectively—all well after 28.02.2022. Hence, the department’s orders were within limitation. The Court explicitly found “no reason to interfere” on limitation.
On procedure, the petitioners argued that assessments under Section 73 should have been preceded by scrutiny of returns under Section 61 and notice in ASMT-10 under Rule 99. The Court rejected this, holding that Section 73 is a standalone provision: when it appears to the proper officer that tax has not been paid/short-paid, or ITC was wrongly availed/utilized (without fraud), the officer may directly proceed under Section 73 on a show-cause notice; a Section 61 scrutiny is not a precondition in every case. In other words, scrutiny may be one pathway, but it is not mandatory before invoking Section 73.
The turning point was Section 75(4). That subsection requires that where any adverse decision is contemplated, an opportunity of personal hearing must be granted—even if the taxpayer has not specifically requested it—once a reply to the show-cause notice is on record. The Court emphasized that this is a “statutory mandate, from which there is no escape.” Consequently, in all petitions where no personal hearing was afforded before passing adverse orders, the Court set aside those orders and remanded the matters to the respective assessing officers to issue notice, grant a hearing (on the notified date or one adjournment), and pass fresh orders within three months or within the statutory limitation, whichever is later.
However, in those writ petitions where a personal hearing had in fact been afforded, the Court refused to interfere and rejected the petitions. Thus, outcomes varied across the batch depending on compliance with Section 75(4).
To summarise the net effect:
• Limitation defence failed because the annual-return due dates were extended and pandemic-period exclusions applied.
• The “scrutiny first” argument failed; Section 73 can be invoked independently on a show-cause notice.
• The “personal hearing” argument succeeded wherever hearings were not granted; those orders were quashed and remanded with a clear direction to hear the assessees and decide afresh promptly.
Significance or Implication of the Judgment
For taxpayers and practitioners, this judgment reinforces two critical procedural and substantive guardrails in GST adjudication:
- Procedural fairness is non-negotiable. If an officer proposes to pass an adverse order under Section 73, a personal hearing must be granted under Section 75(4) once a reply exists. Lack of hearing will vitiate the order and lead to remand, costing time and resources to both sides.
- Limitation must be computed with the correct statutory anchors. The judgment carefully ties limitation to the extended due dates for annual returns and the Supreme Court’s pandemic-period exclusion. Taxpayers should be cautious before raising limitation challenges for FYs 2017-18 to 2019-20; this case illustrates why many such challenges may fail.
For the administration, the ruling is a clear compliance checklist: (a) ensure proper Section 73 notices; (b) do not treat Section 61 scrutiny as a universal prerequisite; and (c) always schedule and record a personal hearing when an adverse order is contemplated. Failure on (c) invites a remand and delays revenue finality.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
• Limitation for FYs 2017-18, 2018-19, 2019-20 under Section 73/74
— Decision: Not time-barred.
— Reasoning: Annual-return due dates under Section 44(1) were extended (2017-18 up to 07.02.2020 in Bihar; 2018-19 and 2019-20 up to 31.12.2020 and 31.03.2021 respectively). The Supreme Court’s suo motu orders excluded 15.03.2020–28.02.2022 from limitation; within the three-year windows, the exclusion applied, so the department was within time.
• Whether scrutiny under Section 61/Rule 99 is a precondition to Section 73 proceedings
— Decision: No.
— Reasoning: Section 73 is a standalone provision. Scrutiny (Section 61) may be used, but it is not mandatory in every case before issuing a Section 73 notice.
• Whether a personal hearing is mandatory under Section 75(4) before passing an adverse order
— Decision: Yes; orders passed without such opportunity are vitiated.
— Reasoning: Section 75(4) mandates that where an adverse decision is contemplated, a hearing must be granted. Orders lacking hearing were set aside and matters remanded with specific timelines.
• In Re: Cognizance for Extension of Limitation, Supreme Court, order dated 10.01.2022
Case Title
Vinod Singh v. State of Bihar & Ors.” (CWJC No. 4180 of 2024)
Case Number
CWJC No. 4180 of 2024 (lead case) with the connected batch numbers listed above.
Coram and Names of Judges
Hon’ble the Chief Justice K. Vinod Chandran; Hon’ble Mr. Justice Partha Sarthy.
Names of Advocates and who they appeared for
• For petitioners (illustrative across the batch): Mr. Bijay Kumar Gupta, Dr. Alok Kumar Sinha, Mr. D.V. Pathy, Mr. Sadashiv Tiwari, and others.
• For the Union/CGST: Dr. K. N. Singh, Additional Solicitor General; assisted by Mr. Anshuman Singh (Sr. SC, CGST & CX), Mr. Devansh Shankar Singh, and Mr. Shivadity D. Sinha.
• For the State of Bihar: Mr. Vikash Kumar, Standing Counsel-11; Government Pleader-7 also appeared in several matters.
Link to Judgment
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