2023 (9) TMI 439 - HC - GST

Violation of the principles of natural justice - direction to re-do the assessment after considering the reply - seeking sufficient opportunity for personal hearing to the petitioner - HELD THAT - On perusing the impugned order, it is seen that the respondent has recorded that the dealer did not file any reply so far. The said fact is incorrect. The petitioner has submitted a reply on 24.07.2023. However, the learned Government Advocate appearing for the respondent submitted that the petitioner was granted three personal hearings and the petitioner did not appear and has not submitted any reply on the said three days. Even though the petitioner has not appeared for the said three personal hearings, subsequently, he has filed a reply on 24.07.2023, before passing the impugned order dated 25.07.2023 and the respondents are bound to consider the reply. Therefore, the assessment order is passed violating the principles of natural justice. Moreover, it is the case of increase in GST from 12% to 18% for works contract executed for the government department and local bodies. Even though the petitioner is liable to pay GST, but ultimately it is the Government and the Local Bodies has to pay the GST and the petitioner is entitled to pay and recover from the government. Hence, the ultimate sufferer is the Government. The respondents are directed to grant one more personal hearing to the petitioner and the petitioner shall cooperate with the enquiry. Thereafter, the respondent shall pass a speaking order - the impugned order ought to be quashed - Petition allowed.

Summary

Issues Involved:
The issues involved in the judgment are quashing of an assessment order for violation of natural justice principles and re-doing the assessment process under the GST Act.

Violation of Natural Justice Principles:
The petitioner filed a writ petition seeking to quash an order passed by the respondent, alleging it to be illegal and in violation of natural justice principles. The petitioner contended that despite submitting a reply on 24.07.2023, the respondent passed the order on 25.07.2023 without considering the reply. Upon examination, it was found that the respondent incorrectly stated that the dealer did not file any reply. The petitioner indeed submitted a reply before the impugned order was passed. The court held that the assessment order was made in violation of natural justice as the reply was not considered, emphasizing the importance of adhering to procedural fairness.

GST Assessment for Works Contract:
The case involved an increase in GST from 12% to 18% for works contracts executed for government departments and local bodies. While the petitioner was liable to pay GST, it was noted that ultimately the government and local bodies would bear the burden of the tax. The court acknowledged that the petitioner could pay and recover the GST from the government, making the government the ultimate sufferer in this scenario. This aspect was considered in the context of the overall assessment and liability under the GST Act.

Court's Decision and Directions:
The High Court directed the respondent to grant one more personal hearing to the petitioner, emphasizing the importance of cooperation from the petitioner during the enquiry process. It was ordered that a speaking order should be passed by the respondent after the additional hearing. The court mandated that this process should be completed within eight weeks from the date of receipt of the order. Ultimately, the writ petition was allowed, with no costs imposed, and the connected miscellaneous petition was closed as a result of the judgment.