2021 (6) TMI 292 - HC - GST

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

M/s. GRT Hotels and Resorts Pvt. Ltd., Versus State of Andhra Pradesh, Assistant Commissioner of State Tax,

The High Court of Andhra Pradesh allowed a Writ Petition challenging an order of demand passed by the Assistant Commissioner of State Tax for ... Determination of tax - grant of opportunity of hearing where a request is received in writing - Sub-Section (4) of Section 75 of CGST Act - HELD THAT:- Sub-Section (4) of Section 75 of the Act, in clear and vivid terms, stipulates that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person - In the instant case, though show cause notice was issued on 06.01.2021, asking the petitioner herein to submit objections, in the considered opinion of this Court, second respondent herein, before resorting to the impugned action, ought to have served on the petitioner the notice of personal hearing, indicating the date of hearing, according to the second limb of sub-Section (4) of Section 75 of the Act. In the instant case, the said mandatory requirement is not complied with. This Court is inclined to set aside the impugned order, dated 09.02.2021 - Petition allowed. 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.