GST assessment on works contract rate increase challenged for ignoring dealer's written reply; order quashed for natural justice breach.

The dominant issue was breach of natural justice in passing a GST assessment without considering the dealer's written reply. The HC held that although multiple personal hearings were afforded and the dealer did not attend, a reply was filed before the assessment order and the authority was duty-bound to consider it; recording that no reply was filed was factually incorrect, vitiating the assessment. Consequently, the impugned assessment order was quashed and the matter remitted with a direction to grant one further personal hearing and thereafter pass a reasoned speaking order. The HC also noted that the tax incidence on the works contract rate increase would ultimately fall on government entities, reinforcing the need for a fair reconsideration.

---

---

Issues Involved:
The issues involved in the judgment are quashing of an assessment order for violation of natural justice principles and re-doing the assessment process under the GST Act.

Violation of Natural Justice Principles:
The petitioner filed a writ petition seeking to quash an order passed by the respondent, alleging it to be illegal and in violation of natural justice principles. The petitioner contended that despite submitting a reply on 24.07.2023, the respondent passed the order on 25.07.2023 without considering the reply. Upon examination, it was found that the respondent incorrectly stated that the dealer did not file any reply. The petitioner indeed submitted a reply before the impugned order was passed. The court held that the assessment order was made in violation of natural justice as the reply was not considered, emphasizing the importance of adhering to procedural fairness.

GST Assessment for Works Contract:
The case involved an increase in GST from 12% to 18% for works contracts executed for government departments and local bodies. While the petitioner was liable to pay GST, it was noted that ultimately the government and local bodies would bear the burden of the tax. The court acknowledged that the petitioner could pay and recover the GST from the government, making the government the ultimate sufferer in this scenario. This aspect was considered in the context of the overall assessment and liability under the GST Act.

Court's Decision and Directions:
The High Court directed the respondent to grant one more personal hearing to the petitioner, emphasizing the importance of cooperation from the petitioner during the enquiry process. It was ordered that a speaking order should be passed by the respondent after the additional hearing. The court mandated that this process should be completed within eight weeks from the date of receipt of the order. Ultimately, the writ petition was allowed, with no costs imposed, and the connected miscellaneous petition was closed as a result of the judgment.

---