Madras HC Quashes GST Order for Lack of Personal Hearing; Allows Fresh Assessment with 25% Pre-Deposit

The High Court has passed a significant decision in favour of a petitioner, highlighting the importance of natural justice while passing a final order.

The petitioner company, Pavithra Constructions, received a show cause notice dated 22.05.2024 and a reminder dated 04.07.2024 from the GST officer. The company’s consultant was not available at that time, and therefore they could not submit their response. Even after this, the GST department issued the final order dated 28.08.2024 without giving the opportunity of a personal hearing to the petitioner company.

The company also stated that it is willing to pay 25% of the disputed tax amount to the respondents (The Deputy State Tax Officer, The Deputy Commissioner, The Branch Manager of Kotak Mahindra Bank). Therefore, the company approached the Madras High Court to request an opportunity for a hearing.

The High Court observed Section 75(4) of the GST Act, 2017, which mandates the tax department to provide an opportunity of personal hearing to the assessee before passing the assessment order. In the present case, the department had clearly violated the provisions of Section 75(4) of the GST Act and also violated the principles of natural justice.

Therefore, the court set aside the final order dated 28.08.2024, and remanded the case on the condition that the company shall pay 25% of the disputed tax amount to the respondents (The Deputy State Tax Officer, The Deputy Commissioner, The Branch Manager of Kotak Mahindra Bank) within four weeks. The Court also directed the company to file their reply along with the documents within three weeks from the date of the said payment. The GST officer is also directed to consider the reply of the petitioner and issue a 14-day notice by scheduling a date for personal hearing. The final order was ordered to be passed after hearing the side of the petitioner.