The Madras High Court ( HC ) has held that the finalisation of the assessment without a personal hearing is invalid.
SKS Builders and Promoters, the petitioner is a company engaged in the activity of civil construction and is registered under the provisions of the Tamil Nadu Goods and Services Tax Act, 2017 (‘Act’). The petitioner participates in Government tenders and is also a sub-contractor engaged in activity subcontracted by the main contractors because of contracts entered into by the former with the Government.
The petitioner was awarded a subcontract for the construction of a new division office building in Trichy for the Tamil Nadu Housing Board which was under an agreement that the petitioner states, was entered into by the main contractor with the Board on 28.08.2020. The value of the main contract between the contractor and the Housing Board was for a sum of Rs.8,20,04,631/-, whereas his agreement was for a sum of Rs.7,86,99,262/-.
The petitioner claimed that he is entitled to the benefit of Notification No. 11 of 2017 dated 28.06.2017, which, in terms of clause (ix) thereof, grants the benefit of concessional rate of composite supply of works contract, as defined under clause 119 of Section 2 of the Central Goods and Services Tax Act, 2017, to a sub-contractor to the main contractor who provides services as specified in item (iii) or (vi) to the Central or State Governments, Union Territory, Local Authority, Government authority or Government entity.
A notice was issued initially which was superseded by a revised notice in Form GST DRC-01 dated 24.11.2022. The officer grants an opportunity of filing a representation with all documentary shreds of evidence within 30 days of receipt of notice simultaneously granting the opportunity of hearing as well.
The personal hearing has, admittedly, not been fixed by date or time and this is a gross flaw in this order, which this Court is tired of pointing out. The petitioner has also in compliance with the notice, filed a submission on 29.11.2022, though without any supporting documents.
The petitioner asks for a hearing in person before the issue is decided. The officer has brushed aside the request for a personal hearing, proceeding instead to straight away pass the impugned order without hearing the petitioner.
The provisions of Section 75(4) which deal with the general procedure to be followed in the determination of tax, specifically mandate that an opportunity for a hearing shall be granted where a request is received in writing from the person chargeable to tax or penalty or where any adverse decision is contemplated as against such person.
Dr Justice Anita Sumanth observed that the officer has grossly erred in proceeding to finalise the impugned assessment in violation of the principles of natural justice. The Court further set aside the impugned orders and allowed the Writ Petitions.
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