Case Law Details
Tvl. Signet Industries Limited Vs State Tax officer (Madras High Court)
Madras High Court held that section 75(4) of the GST Act mandates that if an adverse order is going to be passed, it is mandatory to provide an opportunity of personal hearing. Thus, order confirming demand passed without providing personal hearing is against the principles of natural justice.
Facts- A notice in Form DRC-01 was issued by the respondent on 28.12.2023. The petitioner filed reply to the said notice on 20.02.2024. Without affording an opportunity of personal hearing to the petitioner, the assessment order came to be passed on 26.04.2024.
Petitioner contended that if the respondent is intended to take any action and pass the assessment order against the petitioner, it is mandatory to issue notice of personal hearing u/s. 75(4) of the GST Act. Therefore, he submitted that the impugned order is in violation of Section 75(4) of the GST Act.
Further, an attachment order was passed subsequent to the impugned assessment order by virtue of notice dated 30.09.2024 and the petitioner’s bank account was also freezed. He further submitted that it is a cash credit account since the respondent has fixed the credit limit, whenever the amount is required, they can take the credit only for the purpose of business. Therefore, attachment order may be lifted and permit the petitioner to operate the cash credit account. Hence, he prayed for setting aside the impugned order and this Court may issue direction to de-freeze the cash credit account of the petitioner.
Conclusion- Held that the provision of Section 75(4) of the GST Act mandates that if an adverse order is going to be passed, it is mandatory to provide an opportunity of personal hearing to the Assessee. However, in the case on hand, though the impugned assessment order was passed against the petitioner by confirming the demand, the respondent had failed to provide an opportunity of personal hearing as per the terms of Section 75(4) of the GST Act. Thus, it is clear that the impugned order was passed in violation of principles of natural justice as well as in contravention of provision of Section 75(4) of the GST Act and hence, the same is liable to be set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present Writ Petition has been filed for issuance of a Writ of Certiorari, to call for the records of the impugned order dated 26.04.2024 with the reference No.ZD330424209630U issued by the respondent and quash the same.
2. The learned senior counsel for the petitioner would submit that a notice in Form DRC-01 was issued by the respondent on 28.12.2023. The petitioner filed reply to the said notice on 20.02.2024. Without affording an opportunity of personal hearing to the petitioner, the assessment order came to be passed on 26.04.2024. If the respondent is intended to take any action and pass the assessment order against the petitioner, it is mandatory to issue notice of personal hearing under Section 75(4) of the GST Act. Therefore, he submitted that the impugned order is in violation of Section 75(4) of the GST Act. Further, an attachment order was passed subsequent to the impugned assessment order by virtue of notice dated 30.09.2024 and the petitioner’s bank account was also freezed. He further submitted that it is a cash credit account since the respondent has fixed the credit limit, whenever the amount is required, they can take the credit only for the purpose of business. Therefore, attachment order may be lifted and permit the petitioner to operate the cash credit account. Hence, he prayed for setting aside the impugned order and this Court may issue direction to de-freeze the cash credit account of the petitioner.
3. Learned Additional Government Pleader(T) appearing for the respondent, on instructions, would fairly submit that no opportunity of personal hearing was provided to the petitioner in terms of Section 75(4) of the Act. Hence, he submitted that the matter may be remanded back to the respondent for reconsideration. Further, he would submit that if any order is passed by this Court, the same will be complied with by the respondent.
4. Heard the learned senior counsel for the petitioner and the learned Additional Government Pleader (T) for the respondent and perused the materials placed before this Court.
5. The main issue that arises for consideration in the present case is as to whether the opportunity of personal hearing was provided to the petitioner before the passing of assessment order. Admittedly, no such opportunity of personal hearing was provided to the petitioner.
6. The provision of Section 75(4) of the GST Act mandates that if an adverse order is going to be passed, it is mandatory to provide an opportunity of personal hearing to the Assessee. However, in the case on hand, though the impugned assessment order was passed against the petitioner by confirming the demand, the respondent had failed to provide an opportunity of personal hearing as per the terms of Section 75(4) of the GST Act. Thus, it is clear that the impugned order was passed in violation of principles of natural justice as well as in contravention of provision of Section 75(4) of the GST Act and hence, the same is liable to be set aside.
7. In view of the above, this Court passes the following order:
i. The impugned order dated 26.04.2024 is set aside and remanded back to the respondent for re-adjudication.
ii. If the petitioner is intend to file any additional reply, the same shall be filed within a period of 2 weeks from the date of receipt of copy of this order.
iii. On filing of such additional reply by the petitioner, the respondent shall consider the same and issue a 14 days clear notice, by fixing the date of personal hearing, to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
iv. Considering the fact that the impugned order itself has been set aside, this Court is of the opinion that the attachment made on the bank account of the petitioner cannot survive any longer and hence, it is lifted. As a sequel, the respondent is directed to instruct the concerned bank to release the attachment and de-freeze the cash credit account of the petitioner, immediately upon the production of a copy of this order.
6. With the above directions, this Writ Petition is disposed of.
There shall be no order as to costs. Consequently, the connected Miscellaneous Petitions are closed.
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