Tax Authority Violates Natural Justice Principles, Assessment Order Quashed, Petitioner Granted Hearing and Reconsideration of Concessional Rate Claim

HC found that the tax authority violated procedural principles by not providing a proper hearing to the petitioner before finalizing the assessment. The court set aside the impugned orders, emphasizing the importance of natural justice under Section 75(4). The petitioner's claim for concessional rate under Notification No. 11 of 2017 was remanded for reconsideration with an opportunity to be heard.

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Issues:
1. Entitlement to benefit under Notification No. 11 of 2017.
2. Lack of hearing before passing the impugned order.
3. Violation of principles of natural justice in finalizing the assessment.

Analysis:
1. The petitioner, a civil construction company registered under the Tamil Nadu Goods and Services Tax Act, participated in a sub-contract for constructing a new division office building. The petitioner claimed entitlement to the benefit of Notification No. 11 of 2017, which provides a concessional rate for works contract services provided to government entities. The petitioner's claim was based on the nature of works carried out, as specified in the notification, which includes construction of civil structures for government entities. However, the Assessing Officer did not have access to the relevant documents to verify the nature of the contract, leading to a lack of clarity in the assessment process.

2. The petitioner raised concerns about not being granted a hearing before the impugned order was passed. Despite filing a submission in response to the notice, the petitioner was not afforded a personal hearing as requested. The petitioner argued that under Section 75(4), a request for a hearing should be granted before making any adverse decision against the taxpayer. The failure to provide a proper hearing before finalizing the assessment was highlighted as a procedural flaw that violated the principles of natural justice.

3. The court, upon considering the lack of a proper hearing and the violation of procedural requirements under Section 75(4), set aside the impugned orders and allowed the writ petitions. The decision emphasized the importance of granting a personal hearing to taxpayers before finalizing assessments, except in cases where the taxpayer's stand is accepted by the tax authority. The judgment underscored the significance of upholding principles of natural justice in tax assessments to ensure fairness and procedural compliance.

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