Granting of hearing opportunity is mandatory under Section 75(4) before passing of adverse order

[CA Bimal Jain]

The Hon’ble Karnataka High Court in M/S. BANGALORE GOLF CLUB VERSUS COMMERCIAL TAX OFFICER (ENFORCEMENT) , BENGALURU, THE GOVERNMENT OF KARNATAKA, DEPARTMENT OF FINANCE, BENGALURU, THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT) , BENGALURU - 2024 (6) TMI 696 - KARNATAKA HIGH COURT, set aside the assessment order as no opportunity of hearing was granted to the Assessee before passing of adverse order, thereby holding that, it is mandatory to grant opportunity of hearing as required under section 75(4) of the CGST Act when an adverse order is being contemplated against the Assessee.

Facts:

Bangalore Golf Club (“the Petitioner”), filed a writ petition against order dated December 29, 2023 (“the Impugned Order”) passed by the Revenue department (“the Respondent”) challenging the liability imposed on them under Section 73(9) of the CGST Act for the tax periods of 2017-18 and 2018-19 and also prayed for setting aside of the notifications dated 13.07.2022 and 06.04.2023. The Petitioner contended that the clubbing of financial years and passing a common order was impermissible. Further, it was argued that the Petitioner was not granted an opportunity of hearing in case of passing of adverse order as required under Section 75(4) of the CGST Act.

Issue:

Whether it is mandatory to grant opportunity of hearing as required under section 75(4) of the CGST Act when an adverse order is being contemplated against the Assessee?

Held:

The Hon’ble Karnataka High Court in M/S. BANGALORE GOLF CLUB VERSUS COMMERCIAL TAX OFFICER (ENFORCEMENT) , BENGALURU, THE GOVERNMENT OF KARNATAKA, DEPARTMENT OF FINANCE, BENGALURU, THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT) , BENGALURU - 2024 (6) TMI 696 - KARNATAKA HIGH COURT set aside the Impugned Order as no opportunity of hearing was granted by the Respondent which was required under section 75(4) of the CGST Act in case any order for levy of tax, penalty, or any other adverse decision is being contemplated against the Petitioner.

Relevant provision:

Section 75(4) of the CGST Act:

            Section 75: General provisions relating to determination of tax

(4) 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.

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