Facts of the Case:

In this case, the petitioner challenged an order passed by the appellate authority under Section 107, whereby the petitioner’s statutory appeal against an adjudication order under Section 73 was dismissed ex-parte. Under the adjudication order, the petitioner was held liable for excess availment of input tax credit along with interest and penalty.

In the appellate proceedings, the first date of hearing was fixed on 3 August 2023, on which the petitioner appeared through its authorised representative and sought an adjournment, which was granted. The next date of hearing was fixed on 5 October 2023. On that date, the petitioner remained unrepresented. Subsequently, after a gap of nearly seven months, the appellate authority proceeded to dismiss the appeal ex-parte and, while doing so, enhanced the penalty from ₹1,000 to ₹10,000. 

Issue:

Whether the ex-parte dismissal of the appeal and enhancement of penalty by the appellate authority, without granting a further opportunity of hearing or issuing notice for enhancement of penalty, was sustainable in law and in compliance with principles of natural justice and Section 107(11) of the GST Act.

Held that: 

The High Court held that the impugned appellate order could not be sustained as it was passed in violation of the principles of natural justice. The Court noted that the appellate authority did not decide the appeal on or around the adjourned date but passed the ex-parte order after a considerable lapse of time. In such circumstances, fairness demanded that at least one more opportunity of hearing be granted to the petitioner.

The Court further held that enhancement of penalty from ₹1,000 to ₹10,000 without issuing any notice or affording the petitioner an opportunity to show cause was clearly contrary to the first proviso to Section 107(11) of the GST Act, which mandates a reasonable opportunity of hearing before enhancement of penalty.

Accordingly, the appellate order was set aside solely on the ground of violation of natural justice.

Case Name: Chatterjee Concern, a Partnership Firm and Anr. Versus State of West Bengal & Ors. dated 20.01.2026

To read the complete judgement 2026 Taxo.online 126