Not allowing personal hearing to petitioner violates principles of natural justice

CSK Realtors Limited Vs ACST (Telangana High Court)

The court is of the opinion that the opinion that the 1^st respondent ought to have provided a personal hearing to the petitioner, since the petitioner requested for it specifically in its objections dt.18.02.2020 filed by it to the show cause notice issued on 31.01.2020 to it by the 1^st respondent, and that failure of the 1st respondent to do so is a violation of principles of natural justice warranting setting aside of the impugned order.

Accordingly, the Writ Petition is allowed; the impugned assessment order passed by the 1^st respondent on 13.03.2020 in Form GST DRC-07 for the tax periods 2017-18 and 2018-19 is set aside; the matter is remitted back to the 1^st respondent for fresh consideration; the 1st respondent shall provide a personal hearing to the petitioner; and then the 1^st respondent shall pass a reasoned order in accordance with and communicate it to the petitioner. No order as to costs.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. Petitioner is a Private Limited Company incorporated under the Companies Act, 1956.

2. It is engaged in the business of construction and sale of flats and villas and is also an assessee on the rolls of the 1^st respondent under the Goods and Services Tax Act, 2017 (for short ‘the Act’)

3. The 1st respondent issued notice intimating the discrepancies in the returns after scrutiny in Form GST ASMT-10, dt. 17.12.2019 to the petitioner for the tax period 2017-18 to 2018-19 (from July, 2017 to March, 2019). In the said notice, he proposed to levy tax of 3,27,36,879/-.

4. Detailed objections were filed by the petitioner through its letter dt. 24.12.2019 before the 1st respondent.

5. Thereupon, the 1^st respondent got issued show cause notice under Section 73 of the Act on 31.01.2020 in Form GST DRC-01 for the tax periods July, 2017 to March, 2018 and April, 2018 to March, 2019 proposing to levy CGST + SGST totaling to Rs. 3,27,36,878/-.

6. Petitioner again filed detailed objections through its letter dt.18.02.2020 and also sought for a personal hearing before the 1st respondent.

7. But the 1st respondent, after receiving the said objections of the petitioner on 19.02.2020, did not afford any personal hearing to the petitioner, and passed the impugned assessment order dt.13.03.2020 under Section 73 of the Act, and summary of the order in form GST DRC 07 dt.13.03.2020 for the above tax periods demanding the above amount from the petitioner.

8. Apart from contentions on merits, petitioner contends that when there is a specific request from the petitioner to provide personal hearing, it is the duty of the 1^st respondent to provide such a personal hearing.

9. Reliance is placed on the judgments of this Court in M/s Manjunatha Traders, New Firm, Proddatur and another v. Commercial Tax Officer-II, Proddatur & Others¹ and Lalaiah & Co. v. Deputy Commissioner (CT), Sarrornagar Division Hyderabad & another², and it is contended that the very purpose of personal hearing is to enable the assessing officer to get enlightened or to enlighten the assessee about the nature of the claim made by them, and once the assessee seeks personal hearing, the denial of such opportunity would vitiate the order passed.

10. Sri J.Anil Kumar, Special Counsel for Commercial Taxes appearing for respondents does not dispute the above legal principles.

11. In view of the said legal position, we are of the opinion that the 1^st respondent ought to have provided a personal hearing to the petitioner, since the petitioner requested for it specifically in its objections dt.18.02.2020 filed by it to the show cause notice issued on 31.01.2020 to it by the 1^st respondent, and that failure of the 1st respondent to do so is a violation of principles of natural justice warranting setting aside of the impugned order.

12. Accordingly, the Writ Petition is allowed; the impugned assessment order passed by the 1^st respondent on 13.03.2020 in Form GST DRC-07 for the tax periods 2017-18 and 2018-19 is set aside; the matter is remitted back to the 1^st respondent for fresh consideration; the 1st respondent shall provide a personal hearing to the petitioner; and then the 1^st respondent shall pass a reasoned order in accordance with and communicate it to the petitioner. No order as to costs.

13. Consequently, miscellaneous petitions, pending if any, shall stand closed.