2023 (3) TMI 426 - HC - GST

Validity of demand notice with assessment order - Violation of principles of natural justice (audi alterem partem) - opportunity of personal hearing not provided - Benefit of concessional rate of composite supply of works contract - N/N. 11 of 2017 dated 28.06.2017 - HELD THAT - The personal hearing has admittedly not been fixed by date or time and this is a gross flaw in this order which this Court is tired of pointing out. The petitioner has also in compliance with the notice filed a submission on 29.11.2022 though without any supporting documents. The sum and substance of Section 75(4) is that a personal hearing shall be granted in all matters prior to finalisation of assessment except where the stand of the assessee is intended to be accepted by the Department. Thus on this score the officer has grossly erred in proceeding to finalise the impugned assessment in violation of the principles of natural justice. The impugned orders are set aside and these Writ Petitions are allowed.

Summary

Issues:
1. Entitlement to benefit under Notification No. 11 of 2017.
2. Lack of hearing before passing the impugned order.
3. Violation of principles of natural justice in finalizing the assessment.

Analysis:
1. The petitioner, a civil construction company registered under the Tamil Nadu Goods and Services Tax Act, participated in a sub-contract for constructing a new division office building. The petitioner claimed entitlement to the benefit of Notification No. 11 of 2017, which provides a concessional rate for works contract services provided to government entities. The petitioner's claim was based on the nature of works carried out, as specified in the notification, which includes construction of civil structures for government entities. However, the Assessing Officer did not have access to the relevant documents to verify the nature of the contract, leading to a lack of clarity in the assessment process.

2. The petitioner raised concerns about not being granted a hearing before the impugned order was passed. Despite filing a submission in response to the notice, the petitioner was not afforded a personal hearing as requested. The petitioner argued that under Section 75(4), a request for a hearing should be granted before making any adverse decision against the taxpayer. The failure to provide a proper hearing before finalizing the assessment was highlighted as a procedural flaw that violated the principles of natural justice.

3. The court, upon considering the lack of a proper hearing and the violation of procedural requirements under Section 75(4), set aside the impugned orders and allowed the writ petitions. The decision emphasized the importance of granting a personal hearing to taxpayers before finalizing assessments, except in cases where the taxpayer's stand is accepted by the tax authority. The judgment underscored the significance of upholding principles of natural justice in tax assessments to ensure fairness and procedural compliance.