Allahabad HC Quashes GST Order Passed Without Notice Under Section 46 of GST Act

In a significant development emphasizing procedural fairness, the Allahabad High Court quashed a GST assessment order that was passed without issuing a proper notice under Section 46 of the CGST Act, 2017. The verdict reinforces the importance of following due process and ensures taxpayer rights are protected under the law.

Case Background

The petitioner, Xestion Advisor Private Limited, is a company registered under the Companies Act, 1956. It is actively engaged in offering management consultancy services.

On September 21, 2020, the GST authorities issued an assessment order against the company without serving a prior notice under Section 46 of the Central Goods and Services Tax (CGST) Act, 2017. This section clearly mandates that a notice must be issued to a registered person if they fail to furnish a return under Section 39 (monthly return), giving them an opportunity to comply within 15 days.

However, in this case, no such notice was issued, and the order was passed ex parte (without hearing the taxpayer).

Court’s Observations

The Allahabad High Court noted that the issuance of a notice under Section 46 is not just a formality, but a legal requirement. It provides the taxpayer an opportunity to respond and comply voluntarily before any coercive action is taken.

The bench observed:

“When a statute prescribes a manner of doing something, it must be done in that manner or not at all.”

This principle, derived from well-settled legal jurisprudence, was applied in favor of the taxpayer.

Section 46 of CGST Act: Key Takeaway

• Section 46 of the CGST Act mandates that when a registered taxpayer fails to file returns, a notice must be issued to them.
• The notice should allow 15 days for filing the return before proceeding with an assessment.

In this case, bypassing this step violated natural justice principles, as the taxpayer was not given a fair opportunity to present their case or rectify the omission.

Outcome of the Case

• The Allahabad High Court quashed the assessment order.
• The court directed that a fresh assessment can only be made if proper notice is issued as per Section 46.
• The decision reinforces that legal procedures cannot be skipped, especially when they directly impact a taxpayer’s rights.

❓ FAQs

1. What is Section 46 of the CGST Act?

Section 46 allows the GST officer to issue a notice to a registered person who fails to file a return under Section 39, giving them 15 days to comply before any further action.

2. Why was the GST order quashed in this case?

Because no notice was served under Section 46 before passing the assessment order, which violated the principles of natural justice and legal procedure.

3. Can the authorities issue a new assessment order?

Yes, but only after issuing a proper notice under Section 46 and allowing the taxpayer a fair chance to respond.

4. What should taxpayers learn from this case?

Always keep records of GST return filings, and know your rights under the law. If due process isn’t followed, courts can step in to protect those rights.

5. Can I challenge a GST order if no notice was served?

Yes. If mandatory procedures like issuing notices are skipped, you can file a writ petition in the High Court.

Conclusion

This judgment by the Allahabad High Court serves as a reminder that tax authorities must strictly adhere to the procedures outlined in the GST Act. While compliance from taxpayers is expected, enforcement from authorities must also follow the rule of law and principles of fairness.

If you’ve received a GST order without proper notice or due process, it’s crucial to consult a tax advisor or legal expert to assess your options. The courts are clear: Justice must not only be done but also be seen to be done.

📅 Published on: 22 May 2025
✍️ Author: CS Chhavi Goyal