2023 (6) TMI 939 - HC - GST

Tax Assessment Overturned: Procedural Fairness Prevails with Mandatory Personal Hearing Under Section 75(4) of GST Act

M/s. Sri Krishna Timbers Represented by its Authorised Representative N. Prakash Patel, M/s. Maruthi Traders Represented by its Proprietor Prakash Patel Versus State Tax Officer (Collection and Arrear) Tirunelveli, Superintendent of GST & Central Excise

Petitioners challenged tax assessments under Tamil Nadu GST Act, alleging violation of natural justice. HC found assessing officer failed to provide ... Violation of principles of natural justice (audi alterem partem) - request for a personal hearing prior to finalization of the proceedings was ignored - HELD THAT:- The impugned orders have been passed under the provisions of Section 74 of the Act and the officer is, in passing the orders, bound by the general provisions relating to determination of tax as set out under Section 75 of the Act. Section 75(4) provides for an opportunity of hearing to be granted to an assessee where such request is received in writing from the person chargeable with tax or penalty or where any adverse decision is contemplated against the paid person. Seeing as the petitioners have specifically requested for an opportunity of personal hearing, it was incumbent upon the officer to have fix the matter for hearing, heard the petitioners and thereafter determined the tax payable. The impugned orders of assessment are set aside. The petitioners will appear before the assessing officer on 22.06.2023 at 10.30 a.m. along with all/any materials, in support of their contentions without anticipating any further notice - Petition allowed by way of remand. Issues involved: The challenge to assessments made under the Tamil Nadu Goods and Service Tax Act for the periods 2017-18 and 2018-19, focusing on violation of principles of natural justice.Summary:Violation of Principles of Natural Justice: The petitioners raised concerns about the initiation of proceedings by State Tax Department officers despite being registered as a Central assessee. However, during the hearing, the focus was on the violation of principles of natural justice. The petitioners had requested a personal hearing before the finalization of proceedings, which was ignored by the assessing officer. The impugned orders were passed under Section 74 of the Act, with the officer being obligated to adhere to the general provisions under Section 75 for tax determination. Section 75(4) mandates granting a hearing opportunity upon a written request from the taxpayer or when an adverse decision is anticipated. Since the petitioners specifically sought a personal hearing, the officer should have scheduled a hearing, listened to the petitioners, and then determined the tax payable.Decision and Remand: As a result of the above circumstances, the impugned assessment orders were set aside. The petitioners were directed to appear before the assessing officer on a specified date with supporting materials, treating the impugned orders as show cause notices as well. They were permitted to provide a detailed reply to all points from the assessment orders, show cause notices, and previous counters filed. The officer was instructed to pass orders within six weeks after considering the petitioners' submissions. Failure to appear on the specified date would result in the revocation of the benefits granted under the order. The writ petitions were allowed by way of remand, with no costs imposed, and connected miscellaneous petitions were closed.