Bombay HC quashes Penalty Order passed prematurely without hearing opportunity, Imposes Rs.50,000 cost on Revenue

Bombay HC quashed an order passed u/s 74A(5) of the CGST Act for failure to grant the taxpayer a mandatory opportunity of hearing u/s 75(4) despite an adverse decision, including imposition of penalty, being contemplated. The Court also held that the order was passed before expiry of the 60-day period available to the taxpayer under Section 74A(8)(ii) to pay tax and interest and avoid penalty. It was noted that despite the notice being issued on 11 November 2025, the impugned order was passed on 5 January 2026, before expiry of the 60-day period. Rejecting the Department’s plea to relegate the taxpayer to the Appellate remedy u/s 107, the Court held that writ jurisdiction can be exercised where there is a breach of natural justice or statutory provisions. The Court accordingly quashed the original and rectification orders and imposed cost of ₹50,000 on Revenue.

Hind Maha LLP vs. The State of Maharashtra - Bombay HC (Sept 4, 2026).pdf