Muted Mics, Quashed Demands: How Section 75(4) Rescues Taxpayers from 'No-Hearing' GST Orders
1. Introduction - The "Silent" SCN Problem
Picture this:
A summary show cause notice (SCN) in DRC-01 lands on the GST portal.
You are given a very short time (say, 7 days) to reply.
No date of personal hearing is fixed, no video link is shared, no real opportunity to argue.
Suddenly, an order in DRC-07 pops up confirming the demand with interest and penalty.
If this sounds familiar, you are not alone. Across India, taxpayers are routinely facing GST demand orders passed without any effective opportunity of hearing, despite a clear statutory safeguard in Section 75(4) of the CGST Act, 2017. Courts and tribunals have stepped in and repeatedly held that passing an adverse order without personal hearing violates Section 75(4) and principles of natural justice, and such orders are liable to be quashed and remanded
This article explains how Section 75(4) operates, how courts have interpreted it, what happens to limitation and de-novo proceedings, and what both taxpayers and officers should practically do in "no-hearing" SCN situations.
2. Legislative Framework - Where Does Section 75(4) Sit?
2.1 SCN and adjudication under GST
Demand proceedings in GST are primarily governed by:
Section 73 - tax not paid/short-paid/wrong ITC without fraud, wilful misstatement or suppression.
Section 74 - same situations with fraud, wilful misstatement or suppression.
Orders are usually preceded by:
Section 75 is the general procedural provision applicable to both Sections 73 and 74 - prescribing time limits, adjustments, interest, adjournments, and, crucially, opportunity of hearing.
2.2 Text and essence of Section 75(4)
Section 75(4) essentially provides that:
An opportunity of hearing must be given where
(a) the person chargeable with tax or penalty asks for it in writing, or
(b) any adverse decision is contemplated against such person.
Three key points emerge:
1. The word "shall" makes it mandatory, not optional.
2. The use of "or" makes the two conditions independent:
If taxpayer requests hearing → must be given.
Even if taxpayer does not request hearing, but an adverse decision is proposed → hearing is still mandatory
3. It applies to any proceeding where an adverse order may be passed - not only classic demand, but also, by extension, many cancellation and similar quasi-judicial orders, as High Courts have repeatedly recognised
In substance, Section 75(4) converts the constitutional principle of audi alteram partem (hear the other side) into a statutory command within GST.
3. When Does Section 75(4) Get Triggered?
Section 75(4) kicks in whenever:
1. A written request for hearing is made
Often included as a standard paragraph in the reply:
"Without prejudice, we request a personal hearing under Section 75(4)."Once this is on record, the proper officer cannot bypass personal hearing and directly jump to DRC-07.
2. An adverse decision is contemplated
Even if no reply is filed, and no written request is made, the moment the officer proposes to confirm demand, impose penalty, or cancel registration, an adverse decision is clearly in contemplation.
High Courts have held that personal hearing is mandatory even in such cases, and failure to do so vitiates the order
Thus, Section 75(4) operates as a two-way trigger - taxpayer-driven (request) and State-driven (adverse decision).
4. Common Ways Section 75(4) Is Violated in Practice
Ground reality shows several recurring patterns:
1. No hearing at all
2. Portal uploads = deemed opportunity?
Authorities sometimes argue that because the SCN and order were uploaded on the portal, opportunity of being heard existed.
Courts have rejected this, emphasising that service of notice on portal under Section 169 is different from the actual personal hearing under Section 75(4).
Very short response time + no hearing
Example: SCN summary grants only a week to respond; no subsequent hearing; direct confirmation of demand.
This has led courts to quash orders for violation of Section 75(4) and natural justice.
3. Telephonic conversation treated as "hearing"
Officers sometimes rely on a casual phone call with the taxpayer or consultant as proof of "opportunity of hearing".
High Courts have categorically held that a telephonic call is not a substitute for a formal personal hearing, which must be structured, recorded, and meaningful.
4. Ignoring adjournment requests
Section 75(5) allows up to three adjournments on sufficient cause being shown.
Courts have frowned upon orders passed despite genuine adjournment requests (illness, counsel unavailability, etc.) and have treated this as denial of fair hearing.
5. Judicial Response - Courts Back Section 75(4)
Across several High Courts, a clear judicial pattern has emerged:
5.1 Section 75(4) is mandatory, not procedural nicety
Articles and case commentaries summarising decisions like Eminent Logistics (2025(06)LCX0307), Singh Traders (2025(06)LCX0164), Sri Sai Vishwas Polymers (2025(06)LCX0049), Singla Traders (P&H HC) and Integra Micro Systems (Allahabad HC) highlight that courts have consistently treated Section 75(4) as mandatory and jurisdictional
Orders passed without personal hearing in situations where adverse decisions were taken have been quashed and remanded.
5.2 Even if no reply is filed, hearing cannot be skipped
In a recent Gauhati High Court case (e.g., Diganta Kumar Deka v. State of Assam [2025(10)LCX0200]), the court set aside a demand order where:
SCN summary was issued.
No reply was filed by the assessee.
The authority directly passed an adverse order without granting personal hearing.
The Court held that failure to grant hearing violates the second limb of Section 75(4) (hearing where adverse decision is contemplated) and is a breach of audi alteram partem, irrespective of whether reply was filed.
5.3 Portal uploads & telephonic calls are not enough
Madras, Gujarat and other High Courts have emphasised that:
Mere uploading of notices/orders on the GST portal does not amount to personal hearing.
A brief telephonic conversation cannot be treated as a formal hearing.
Personal hearing must be clearly scheduled, with date/mode intimated, and the order must record that hearing was granted and submissions were considered.
5.4 Relief typically granted The usual pattern of relief is:
Impugned demand order is quashed, being violative of Section 75(4) and natural justice.
Matter is remanded back to the authority for fresh adjudication after granting personal hearing, sometimes with conditions like partial deposit to balance revenue interest.
6. Does the Taxpayer Have to Ask for a Hearing?
A frequent departmental argument is: "The assessee never requested a personal hearing in writing, so there was no violation."
Courts have clearly rejected this for two reasons:
1. Second limb of Section 75(4)
Even if no written request is made, the provision independently requires hearing whenever an adverse decision is contemplated
2. Natural justice cannot be waived by silence
The right to fair hearing is a facet of Articles 14 and 21; it cannot be presumed to be waived merely because the taxpayer did not write a specific letter asking for it.
That said, as a matter of prudence, taxpayers should always request personal hearing in writing to:
Remove any factual dispute later;
Show "clean conduct" when approaching High Courts;
Make it easier to demonstrate denial of hearing.
7. What Happens Next? Limitation & De-Novo Proceedings
A practical concern is: "If the demand order is quashed for violation of Section 75(4), is the entire tax liability dead?"
Recent commentaries and case notes (including those analysing Diganta Kumar Deka and similar cases) show a consistent trend:
1. Order is quashed, but liberty for fresh proceedings
Courts usually allow the department to initiate de-novo proceedings under Section 73 or 74, as the case may be.
2. Exclusion of time for limitation
The period between the issuance of SCN summary and the date of judgment quashing the order is often directed to be excluded while computing the 3-year/5-year limitation under Section 73(10)/74(10).
3. Net result
The flawed order goes, but the liability does not automatically disappear.
The department can re-adjudicate after granting proper hearing, subject to limitation as re-calculated.
Takeaway for taxpayers:
Not replying to SCN or keeping silent in hope that the order will later be quashed for no hearing is a risky strategy.
Courts are increasingly ensuring that procedural defects can be cured later, without allowing revenue leakage.
8. Practical Playbook for Taxpayers
When you receive an SCN or DRC-01 summary and fear a "no-hearing" order, consider the following steps:
8.1 At the SCN stage
1. File a detailed, timely reply
○ Address each allegation, annex documents, explain reconciliations.
2. Expressly request personal hearing
○ Add a standard paragraph citing Section 75(4):
"Without prejudice, we request a personal hearing under Section 75(4) of the CGST Act before any adverse order is passed."
3. Follow up in writing
○ If no hearing is fixed, send a reminder/email/letter asking for date and mode (physical/VC).
4. Keep evidence
○ Preserve portal screenshots, email acknowledgements, postal receipts etc. They are crucial later in writ petitions.
8.2 When order is passed without hearing
1. Carefully read the order
○ Check if it records:
■ Your reply,
■ That hearing was granted,
■ Your submissions during hearing.
○ If there is no mention or false assertion, that itself is a strong ground.
2. Identify the remedy
○ Appeal to appellate authority under Section 107, raising:
■ Violation of Section 75(4);
■ Denial of natural justice;
■ Inadequate time and no real hearing.
○ Or, in appropriate cases, directly move High Court under Article 226 where:
■ There is patent violation of natural justice;
■ The order is ex-facie without hearing;
■ Limitation or other serious prejudice makes appellate remedy less efficacious
3. Frame relief carefully
○ Typically seek:
■ Quashing of order;
■ Remand with direction to grant personal hearing;
■ Permission to file additional documents/reply.
9. Practical Playbook for the Department
From the department's side, respecting Section 75(4) actually reduces litigation and improves the quality of orders.
9.1 Before passing the order
1. Schedule hearing proactively
○ When you see from file that an adverse order is likely, fix a specific date and time for personal hearing (physical or virtual), irrespective of whether the taxpayer has requested it.
2. Give reasonable notice
○ Ensure at least 10-14 days' clear notice, unless there are compelling reasons.
3. Record details
○ In file and later in the order, record:
■ Date and mode of hearing;
■ Names/designations of persons attended;
■ Brief summary of submissions.
4. Deal with adjournments fairly
○ Section 75(5) allows up to three adjournments on sufficient cause.
○ Reasoned acceptance/rejection of adjournment requests should be placed on record.
9.2 In the final order
1. Expressly mention compliance with Section 75(4)
○ A short, clear paragraph can avoid unnecessary challenges.
2. Pass a speaking order
○ Deal with each major contention of the taxpayer.
○ This enhances sustainability of the order in appeal/writ.
By doing so, the officer not only complies with Section 75(4) but also reinforces fairness and transparency, which courts readily uphold.
10. Conclusion - Section 75(4) as a Safety Valve, Not a Loophole
The jurisprudence around "No Hearing for SCN and Order Passed" shows that Section 75(4) is not a dead letter. High Courts and tribunals across the country have strongly reaffirmed that:
Personal hearing is mandatory where an adverse decision is contemplated, irrespective of written request
Orders passed without such hearing are vitiated for breach of statute and natural justice.
However, the State is usually allowed to re-adjudicate de-novo, with limitation suitably adjusted, so that revenue is also protected.
For taxpayers, Section 75(4) is a powerful "rescue" provision - but it should be used proactively, by:
Making written requests for hearing,
Documenting denial or absence of hearing, and
Invoking natural justice before appellate forums and High Courts where necessary.
For the administration, strict adherence to Section 75(4) is not mere formality; it is an investment in sustainable adjudication. A well-heard case is far less likely to be set aside, and far more likely to command respect from both taxpayers and courts.
In short, when GST mics are muted and orders are passed in silence, Section 75(4) turns up the volume on fairness—ensuring that "No Hearing" does not become the norm, and that every adverse GST order is preceded by a real, meaningful, and recorded opportunity to be heard.
Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.