Personal Hearing Mandatory Upon Request or on Proposed Adverse Order Against Taxpayer

Vel Steel Tubes and Engineering Pvt. Ltd. Vs Assistant Commissioner (ST) (Madras High Court)

Introduction: The case of Vel Steel Tubes and Engineering Pvt. Ltd. vs. Assistant Commissioner (ST) before the Madras High Court revolves around an assessment order dated 09.10.2023, challenged due to the absence of a personal hearing post the petitioner’s response. Despite opportunities provided, the petitioner contests the legality of the order based on procedural grounds.

Detailed Analysis:

1. Lack of Personal Hearing: The petitioner argues that the absence of a personal hearing, as mandated by Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017, renders the assessment order invalid. Despite submitting responses to intimation and show cause notice, the petitioner asserts their right to a personal hearing, which was not granted.

2. Government’s Defense: The government advocate highlights the multiple opportunities provided to the petitioner for contesting the tax demand, including the intimation, show cause notice, and subsequent communications. However, the absence of a formal personal hearing post the petitioner’s reply is acknowledged.

3. Procedural Breach: While the petitioner is criticized for delays in responding to communications, the court emphasizes the mandatory nature of a personal hearing under Section 75(4) of the GST Act. Despite procedural lapses on the petitioner’s part, the court finds the absence of a personal hearing significant enough to warrant interference with the assessment order.

Conclusion: The Madras High Court quashes the assessment order dated 09.10.2023 in the case of Vel Steel Tubes and Engineering Pvt. Ltd. vs. Assistant Commissioner (ST) and remands the matter for reconsideration. Emphasizing the importance of procedural fairness, the court directs the assessing officer to provide the petitioner with a personal hearing opportunity and issues a fresh assessment order within specified timelines. The judgment underscores the significance of adhering to statutory requirements, even in the face of procedural lapses by the petitioner.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An assessment order dated 09.10.2023 is challenged on the ground that personal hearing was not offered after receipt of the petitioner’s reply. In respect of assessment year 2019-20, the petitioner received an intimation in Form GST DRC-01A on 22.12.2022. Such intimation was replied to by the petitioner on 20.06.2023. After issuing a show cause notice on 17.04.2023, the impugned assessment order was issued on 09.10.2023.

2. Learned senior counsel for the petitioner relied on sub- section (4) of Section 75 of the Tamil Nadu Goods and Services Tax Act, 2017 and contended that a personal hearing is mandatory either if requested for or if an order adverse to the taxpayer is proposed to be issued. By pointing out that no personal hearing was offered subsequent to the petitioner’s reply on 20.06.2023, he contends that the assessment order is vitiated for failure to comply with such mandatory requirement.

3. Mr. V. Prashanth Kiran, learned Government Advocate, accepts notice for the respondent. By referring to the impugned assessment order, he points out that the petitioner was provided multiple opportunities to contest the tax demand in the form of intimation, show cause notice and the personal hearing opportunities provided even after the issuance of the show cause notice.

4. The documents on record include the petitioner’s reply on 20.06.2023 and a subsequent e-mail of 23.08.2023 along with the attachments thereto.. Such reply was referred to in the impugned order and treated as a reply to the show cause notice. Although the petitioner is not blameless in as much as much as the petitioner did not reply to the intimation within a reasonable time or reply to the show cause notice, in view of breach of the mandatory requirement of sub-section (4) of Section 75, the impugned order calls for interference.

5. For reasons set out above, the impugned order dated 09.10.2023 is quashed and the matter is remanded for re­consideration. The petitioner is permitted to submit any documents in support of the reply within a maximum period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within two months from the date or receipt of the petitioner’s reply.

6. W.P.No.7817 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.8762 and 8765 of 2024 are closed.