Case Law

Rs. 28.81 Crore Demand, Zero Hearings: Orissa HC Isn’t Having It

Published 25 Aug 2026· 4 min read

The Story

Rs. 28,80,95,516. That’s the GST demand at the centre of M/s Rajlaxmi Constructions Ltd. v. Union of India & Ors. — and the entire order got set aside by the Orissa High Court on 14 August 2026, for a reason that has nothing to do with the merits of the tax question at all.

Rajlaxmi Constructions had specifically asked, in writing, for a personal hearing when it replied to the show cause notice. It never got one. The final order confirming the demand was passed anyway.

That’s it. That’s the whole defect. And it was enough.

The Court leaned on its own earlier ruling in Janardan Panda v. Commissioner, Commercial Tax & GST, Odisha — where it had already said, memorably, that a reply to a show cause notice “cannot be said to be empty formality or useless lumber.” An adjudicating authority has to actually engage with what’s in that reply and record reasons for rejecting it, not just note that a reply exists and move on.

Sidebar: this wasn’t a one-off — the Court was applying its own settled line of precedent, not inventing a new rule on the spot. That consistency is exactly what makes it a reliable ground to raise.

The demand wasn’t cancelled outright, to be clear — the matter goes back for fresh adjudication, this time with the hearing Rajlaxmi Constructions was always entitled to. And notably, the Court preserved a separate argument the company wants to make — that the same transactions were already being pursued by CGST authorities, which would trigger the cross-empowerment bar under Section 6(2) of the CGST Act.

For now, the lesson is almost embarrassingly simple: if you ask for a hearing in writing and don’t get one, that alone can undo a demand — no matter how large.

Why It Matters

Denial of a specifically-requested personal hearing remains one of the most reliably successful grounds for challenging a GST adjudication order on writ, and this ruling — involving a very substantial demand — is a strong, recent, high-value precedent.

Key Takeaways

Where an assessee specifically requests a personal hearing, failing to grant one before passing the final order is a clear violation of natural justice, regardless of the amount involved.
A reply to a show cause notice must be substantively engaged with — the authority must independently apply its mind and record reasons for discarding it.
The Court’s reliance on its own precedent signals this is a settled, consistently-applied position within the Orissa High Court.
The matter was remanded rather than the demand being permanently quashed; the Section 6(2) cross-empowerment point remains open for fresh determination.

Practical Implications

For every ongoing GST adjudication where a personal hearing has been specifically requested, firms should maintain a clear, contemporaneous record of that request. Where a final order has already been passed without the requested hearing, a writ challenge on this specific ground should be evaluated promptly.

Action Checklist

For all pending SCN replies, ensure a personal hearing is explicitly and specifically requested in writing, and documented.
Where an order has been passed without a requested hearing being granted, evaluate a writ petition citing Rajlaxmi Constructions and Janardan Panda.
Where cross-empowerment (Section 6(2)) is a live issue, raise it explicitly as an additional ground.
On remand matters, ensure the client is prepared to comprehensively re-present both legal and factual arguments.

Relevant Sections / Rules / Notifications

Section 75(4), CGST Act, 2017 (mandatory opportunity of hearing where requested in writing)
Section 6(2), CGST Act, 2017 (bar on parallel proceedings by Central and State tax authorities)
Orissa High Court precedent: Janardan Panda v. Commissioner, Commercial Tax & GST, Odisha and others
Orissa High Court ruling: M/s Rajlaxmi Constructions Ltd. v. Union of India and others, 2026 TAXSCAN (HC) 1351, W.P.(C) No. 17210 of 2026, decided 14 August 2026

FAQs

Q: Is a personal hearing mandatory in every GST adjudication, even if not requested?
A: Section 75(4) mandates a hearing opportunity specifically where requested in writing, or where the authority contemplates an adverse decision.

Q: Does this ruling result in the tax demand being cancelled?
A: No — the matter was remanded for fresh adjudication, not finally decided on the merits.

Q: What is the Section 6(2) cross-empowerment point raised in this matter?
A: It generally bars Central and State GST authorities from initiating parallel proceedings on the same subject matter; this point was preserved for the fresh adjudication.

Internal Links

Compliance Alert — Week of 25–31 August 2026
GST / Case Laws hub

None this cycle — first Finoscape coverage of this specific ruling.

Author & Disclaimer

Prepared by Finoscape Editorial Team — contact@finoscape.com. This article is for general informational purposes and does not constitute legal or tax advice. Practitioners should independently verify the current statutory position and the specific facts of each client’s case before advising or filing.