Issue Of Notice Of Hearing Is A Statutory Requirement Under Section 75(4) Of CGST Act Before Imposition Of Tax Or Penalty: Andhra Pradesh High Court

Brief Facts of the Case

The petitioner executed certain works entrusted to it by M/s Tata Projects Limited, and issued Tax invoices to M/s Tata. It was submitted that as per the terms of the agreement, the said Contractee had to pay Service Tax on the same to the petitioner on issue of Tax Invoices by the Petitioner. Though, the Petitioner issued Tax invoices, the Contractee failed to pay GST amounts to the petitioner and withheld the same due to which the petitioner could not file its returns and pay the Taxes as the GST portal would not accept the returns unless accompanied by payment of taxes.

It was submitted that the total GST liability for the works executed for the petitioner during the tax period was around than 1 crore and eighty-five lakhs.

A Garnishee Notice came to be issued to the Contractor stating that the petitioner had failed to pay taxes, penalty and interest under the GST Act and directed them to pay the said amount.

The Order of Assessment passed by respondent under Andhra Pradesh GST Act, 2017 for the tax periods July, 2017 to June, 2019 imposing tax, penalty and interest was challenged to be violative of principles of natural justice in the Writ Petition.

The Petitioner contended that an opportunity of hearing should have been granted to the petitioner in terms of Sub-section (4) of Section 75 of the SGST Act, 2017. The counsel for petitioner submitted that since no opportunity was given, the matter to be remanded back to the Assessing Authority.

The Government Pleader for Commercial Taxes, submitted that though the Assessment Order was passed in the month of July, 2020, the petitioner did not approach the Court within a reasonable time. Furthermore, petitioner approached the Court under writ petition only after issuance of Garnishee Notice. The petitioner could have availed the remedy of appeal as provided in Section 107 of CGST Act, 2017.

Consideration of Court

The provision Section 75(4) of the CGST Act, reads as under:

"An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person."

The court observed that it was evident that an opportunity of hearing was required to be given where a request was made in writing to the person chargeable with taxes and penalty or where any adverse decision was contemplated against such person.

In the instant case, no notice was given to the petitioner before contemplating to pass an adverse order. Such a course was prejudicial to the interest of assesse and the same would be in violation of Sub-section (4) of Section 75 of CGST Act, 2017.

The writ petition was thus allowed setting aside the Assessment Order and the matter was remanded to respondent for passing appropriate orders.

Case title :SM/s. Sree Constructions, Versus The Assistant Commissioner (ST)

Citation : 2022 LiveLaw (AP) 49

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