Case Law Details
J-Lin Constructions Vs Assistant Commissioner (ST) (FAC) ( Madras High Court)
In a recent judgment, the Madras High Court addressed the necessity of personal hearings under GST laws, emphasizing their mandatory nature even in cases where adverse orders are contemplated without explicit request from the taxpayer.
The case involved J-Lin Constructions, a business engaged in civil work contracts, contesting orders and rectification petitions issued by tax authorities. The primary contention was the denial of a personal hearing during the issuance of orders in original and subsequent rectification orders. The petitioner argued that this denial violated Section 75(4) of GST enactments, which mandates a personal hearing before adverse orders are finalized.
The court noted that despite the taxpayer not explicitly requesting a personal hearing, the law obligates tax authorities to provide one when contemplating adverse actions. It highlighted that the failure to provide such a hearing undermines procedural fairness and could render the orders invalid. The judgment emphasized that compliance with procedural requirements, including the opportunity for personal hearing, is crucial to upholding the principles of natural justice.
The respondent, represented by the Additional Government Pleader, countered that a personal hearing was granted during the rectification stage. However, the court ruled that this did not suffice, as the opportunity for a hearing should have been provided earlier, before the issuance of the original adverse orders.
Consequently, the Madras High Court set aside the original orders and directed the tax authorities to reconsider the matters after providing J-Lin Constructions with a proper opportunity, including a personal hearing. This decision underscores the importance of procedural compliance under GST laws and reaffirms the principle that fairness and due process must be upheld in administrative proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In all these writ petitions, orders in original and the subsequent rectification orders are assailed on the ground that the petitioner was not provided a personal hearing.
2. The petitioner is engaged in the business of executing civil work contracts. Pursuant to an inspection of the petitioner’s premises, show cause notice dated 07.07.2023 was issued to the petitioner. Such show cause notice was replied to on 07.08.2023 and 28.08.2023. Orders in original were issued on 19.09.2023. The petitioner filed rectification petitions in respect thereof and such rectification petitions were rejected by orders dated 24.04.2024.
3. Learned counsel for the petitioner submits that the petitioner contended in the reply to the show cause notice that the ingredients of Section 74 were not satisfied. He further submits that the said reply was not into consideration and that no findings were recorded on the petitioner’s contentions. In addition, he submits that no personal hearing was granted thereby violating sub-section (4) of Section 75 of applicable GST enactments.
4. T. N. C. Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He points out that a personal hearing was granted when the rectification petitions were disposed of. He also points out that the petitioner did not request for a personal hearing and that the petitioner checked the box for no personal hearing.
5. Under sub-section (4) of Section 75 of applicable GST enactments, a personal hearing is mandatory not only when requested for but when an order adverse to the tax payer is proposed to be issued. In all these cases, the tax proposals were confirmed without the petitioner being provided a personal hearing. On account of the infraction of a mandatory prescription, orders impugned herein cannot be sustained.
6. Therefore, impugned orders in original dated 19.09.2023 are set and these matters are remanded for reconsideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue fresh orders within three months from the date of receipt of a copy of this order.
7. These writ petitions are disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.
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