Assessee entitled to personal hearing opportunity after passing of Order when amount of tax payable has been appropriated

Assessee entitled to personal hearing opportunity after passing of Order when amount of tax payable has been appropriated

The Hon’ble Madras High Court in the case of Amarjyothi Carrying Corporation v. Assistant Commissioner (ST) [W.P. No.7143 of 2024 dated March 20, 2024], quashed the assessment order and remanded back the matter thereby holding that the Assessee is entitled to personal hearing opportunity after passing of the assessment order due to discrepancy in return when amount of tax payable has been appropriated from bank account.

Facts:

Amarjyothi Carrying Corporation (“the Petitioner”) filed a writ petition against an order dated July 28, 2023 (“Impugned Order”) passed by the Revenue department (“the Respondent”) on the ground that reasonable opportunity was not provided to the Petitioner. The Petitioner stated that while filing GSTR 1, he failed to indicate GST leviable on reverse charge basis. However, the error was subsequently corrected in the GSTR 3B return for the relevant month and annual GSTR 9 return. The Petitioner contended that he was unaware of the proceedings until passing of the Impugned Order. Also, the Respondent contended that the entire amount of tax liability payable under the Impugned Order was appropriated from the Petitioner’s bank account.

Issue:

Whether the Petitioner is entitled to personal hearing opportunity after passing of the Impugned Order due to discrepancy in return when amount of tax payable has been appropriated?

Held:

The Hon’ble Madras High Court in W.P. No.7143 of 2024 held as under:

• Opined that, as the amount of tax payable under the Impugned Order has been appropriated from the Petitioner’s bank account, the interest of the Respondent has been fully secured. Therefore, it would be necessary to provide the Petitioner opportunity for personal hearing.
• Held that, the Impugned Order is quashed, thereby remanded back the matter for reconsideration.
• Directed that, the Respondent shall provide a reasonable opportunity of personal hearing to the Petitioner and, thereafter, issue a fresh order within a period of two months.

Consequently, the Madras High Court quashed the assessment order and remanded the matter back to the Revenue department. It directed the authorities to afford the petitioner a proper opportunity for a personal hearing and to issue a fresh order within a stipulated timeframe. This ruling underscores the importance of procedural fairness in tax assessments, ensuring that taxpayers have adequate opportunities to rectify errors and present their case before final decisions are made.

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