High Court sets aside tax demand order due to lack of personal hearing, emphasizes importance of fair process.

The High Court of Andhra Pradesh allowed a Writ Petition challenging an order of demand passed by the Assistant Commissioner of State Tax for non-compliance with Section 75 of the Central Goods and Services Tax Act. The Court found that the petitioner was not given a personal hearing as required by Section 75(4) before the order was issued. Consequently, the Court set aside the order and remanded the matter for fresh consideration, emphasizing the necessity of providing an opportunity for a personal hearing. The petitioner was granted one week to submit objections, and no costs were awarded.

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Issues:
Challenge to order of demand passed by Assistant Commissioner of State Tax - Compliance with Section 75 of the Central Goods and Services Tax Act, 2017.

Analysis:
The High Court of Andhra Pradesh heard a Writ Petition challenging an order of demand passed by the Assistant Commissioner of State Tax. The petitioner failed to respond to a show cause notice issued by the second respondent within the stipulated time. The main contention raised was the alleged contravention of Section 75 of the Central Goods and Services Tax Act, specifically sub-Section (4), by the second respondent in passing the impugned order.

The learned Government Pleader argued that the petitioner, by not responding to the show cause notice within the specified time, was estopped from challenging the validity of the order. The impugned order was passed under Section 74 of the Act and Rule 142 (5) of the Central Goods and Services Tax Rules, 2017. The crucial question before the Court was whether the order passed by the second respondent was sustainable in light of Section 75 (4) of the Act.

Section 75 (4) of the Act mandates granting an opportunity of hearing when a request is received in writing from the person chargeable with tax or penalty, or when any adverse decision is contemplated against such person. The Court observed that the second respondent should have provided a notice of personal hearing before taking the impugned action, which was not done in this case. Consequently, the Court set aside the order dated 09.02.2021 and remanded the matter to the second respondent for fresh consideration, emphasizing the importance of providing an opportunity for personal hearing.

The Writ Petition was allowed, and the impugned order was set aside. The petitioner was granted one week to submit objections upon receipt of the order. No costs were awarded in this matter, and any pending miscellaneous petitions were to be closed as a result of this judgment.

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