2023 (3) TMI 1265 - HC - GST

Valuation - wages provided to the employees and statutory payments of EPF and ESI, etc., will fall within the ambit of the GST or not - opportunity of hearing not provided to petitioner, who is an old aged lady of 75 years - violation of principles of natural justice - HELD THAT - As per the communication received from the Joint Commissioner (ST) Vijayawada-II Division, leaving the tax period of May 2021 to September 2021, the assessment is confined under the present impugned order for the remaining period i.e., April 2021 and from October 2021 to March 2022. Accordingly, the impugned Assessment Order was passed fixing a total tax liability including interest and penalty at Rs.56,95,19,461/-. No doubt the 3rd respondent has extended some opportunity to the petitioner for personal hearing. However, the fact remains that the petitioner could not avail the said opportunity in view of her old age as she being aged 75 years and also due to her ill health. Having regard to a high tax amount plus interest and penalty proposed to be laid and nature of the contention raised by the petitioner, the 3rd respondent ought to have extended some more opportunity to the petitioner for personal hearing. Therefore, without going into the merits of petitioner s case, it is opined that a direction shall be issued to the 3rd respondent to afford a personal hearing to the petitioner and pass Assessment Order afresh in accordance with law on suitable terms. Without reference to the merits of the petitioner s case, the impugned Assessment Order dated 10.11.2022 passed by the 3rd respondent is set aside on the condition of petitioner depositing 50% of tax component of Rs.23,79,26,090/- as mentioned in the impugned order dated 10.11.2022 within six (6) weeks from the date of receipt of a copy of this order and upon such deposit, the 3rd respondent shall fix a date for personal hearing of the petitioner with regard to her objections to the proposed assessment and after hearing the petitioner, pass an appropriate Assessment Order in accordance with the governing law and rules expeditiously. This Writ Petition is disposed of.

Summary

Issues Involved:
1. Legality of the tax assessment under Section 74(5) of APGST Act, 2017.
2. Inclusion of wages, ESI, and EPF in the taxable value.
3. Opportunity for personal hearing and procedural fairness.

Summary:

1. Legality of the Tax Assessment:
The petitioner challenged the assessment order dated 10.11.2022 under Section 74(5) of the APGST Act, 2017, which directed the payment of Rs.56,95,19,461/- towards differential tax, interest, and penalty. The petitioner argued that the tax should be calculated only on the service charges received and not on the entire value, including wages, ESI, and EPF.

2. Inclusion of Wages, ESI, and EPF in Taxable Value:
The petitioner contended that under Section 9 of the APGST Act, GST is applicable only on service charges, and amounts received for EPF and ESI should not be included. The 3rd respondent countered that as per Section 15(2) of the APGST Act, the value of supply includes all payments made in relation to the supply of services, including wages, ESI, and EPF. The court noted that the petitioner had raised objections in her reply dated 22.10.2022, arguing that these components should not form part of the taxable turnover.

3. Opportunity for Personal Hearing and Procedural Fairness:
The petitioner claimed that the 3rd respondent passed the impugned order without considering her objections and without providing an adequate opportunity for a personal hearing. The court observed that although some opportunities were given, the petitioner, being 75 years old and in ill health, could not avail them. The court held that the 3rd respondent should have extended more opportunities for a personal hearing, given the high tax amount and the nature of the contentions raised.

Conclusion:
The court set aside the impugned assessment order dated 10.11.2022 on the condition that the petitioner deposits 50% of the tax component within six weeks. Upon such deposit, the 3rd respondent is directed to afford a personal hearing to the petitioner and pass a fresh assessment order in accordance with the law. If the petitioner fails to make the deposit, the order shall stand canceled. The writ petition is disposed of without costs, and any pending interlocutory applications are closed.