Madras HC: Personal Hearing Should Be Allowed Before Finalizing GST Assessments

Personal hearings must be allowed in all cases before assessments are finalized, with the exception of those in which the assessee’s position is meant to be accepted by the department, according to a ruling by the Madras High Court.

The single justice bench Anitha Sumanth stated that the officer committed a grave error by proceeding to finish the evaluation in contravention of natural justice principles.

The petitioner/assessee firm is in the civil construction sector and is registered under the Tamil Nadu Goods and Services Tax Act, 2017. The petitioner engages in government bids and is also a subcontractor for activities subcontracted by the principal contractors as a result of contracts the former has with the government.

A subcontract for the building of a new division office for the Tamil Nadu Housing Board was given to the petitioner. According to a contract dated November 25, 2020, the assignment was made as a back-to-back contract. The Housing Board and the contractor entered into a major contract at Rs. 8,20,04,631; nevertheless, the amount of his agreement was Rs. 7,86,99,262.

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The petitioner’s claim is an avowed entitlement to the benefit of the notification from June 28, 2017, which grants the benefit of the composite supply of works contract’s concessional rate to a subcontractor of the primary contractor who offers services to the federal, and state, local, or union territory governments, union territories, government authorities, or government entities.

The petitioner requested a personal hearing before the matter was settled. The officer ignored the petitioner’s request for a personal hearing and went forward with issuing the order without speaking to the petitioner.

An opportunity for a hearing must be provided when a written request is received from the person who is liable for tax penalty or when any adverse decision is anticipated against that person, according to Section 75(4) of the law that governs the general procedure to be followed in the determination of tax.

The court ruled that the decree was seriously flawed and that the personal hearing had not been scheduled.