GST Department Cannot Escape from Issuance of Notice for Personal Hearing citing lack of Request: Patna HC Remands Matter [Read Order]

The Patna High Court has recently ruled that the GST department cannot evade the requirement of issuing a notice for personal hearing, even if the party does not formally request one.

The case revolves around petitions challenging assessment orders for the financial years 2017-18, 2018-19, and 2019-20, with the primary argument focused on the extension of limitation periods under Sections 73(10) and 168A of the Goods and Services Tax ( GST ) Act due to the COVID-19 pandemic.

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The petitioners argued that the extension of the limitation period for assessments, which exceeded the standard three years from the due date for filing returns, was unwarranted, given that the pandemic had subsided by the time the extensions were issued.

The government, however, invoked the power under Section 168A of the Goods and Services Tax Act, which allows the extension of time limits during force majeure conditions like the pandemic.

The petitioners also contested the lack of personal hearings, which they argue are mandated under Section 75(4) of the Goods and Services Tax Act. According to the petitioners, the absence of a personal hearing rendered the proceedings void.

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The Patna High Court delved into the issue of the extended limitation period, particularly scrutinizing the notifications issued under Section 168A, which had provided extensions beyond the usual time limits for passing orders. These extensions, according to the government, were necessary due to the COVID-19 lockdowns and disruptions in administrative operations.

The court emphasized that under Section 75(4), the GST Act mandates a personal hearing before any final assessment order is made, irrespective of whether a formal request for such a hearing is made by the taxpayer. This was a significant point in the ruling, as the court held that the failure to offer a personal hearing violated the principles of natural justice, thus remanding the matter for reconsideration.

The court reiterated that the GST department cannot bypass the requirement of issuing a personal hearing notice. Even if the taxpayer does not request it, the department is still obligated to offer the opportunity for a hearing.

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The court upheld the extension of limitation periods under Section 168A, recognizing the unprecedented disruptions caused by the pandemic. However, it noted that extensions could not continue indefinitely.

In conclusion, while the Patna High Court acknowledged the unprecedented nature of the COVID-19 pandemic and the necessity of administrative extensions, it reinforced the importance of due process in tax assessments, particularly the need for a personal hearing in all cases.

To Read the full text of the Order CLICK HERE

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