In a recent ruling, the Madras High Court quashed the Goods and Service Tax ( GST ) assessment order after the Goods and Service Tax ( GST ) department agreed that they indeed passed the order without providing a personal hearing opportunity which is mandatory under Section 75(4) of the Goods and Service ( GST ) Act, 2017
Signet Industries Limited, the assessee received a notice from the State Tax Officer in Form DRC-01 under the Goods and Services Tax (GST) Act. The assessee submitted a reply to the notice, addressing the tax demand.
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Despite the response, the tax authorities passed an assessment order without granting the assessee a personal hearing opportunity. In addition, the respondent passed an attachment order, freezing the assessee’s cash credit account which was essential for the company’s business operations.
Aggrieved by the decision, the assessee approached the Madras High Court, arguing that the lack of a personal hearing violated the principles of natural justice and Section 75(4) of the Goods and Services Tax (GST) Act. The assessee’s counsel prayed that the attachment order on the assessee’s cash credit account should be lifted, as the credit facility was essential for business operations.
On the other hand, the Additional Government Pleader (Tax) did not dispute the assessee’s claim and admitted that no personal hearing was provided. The respondent’s counsel requested that the matter be remanded for reconsideration in compliance with the legal provisions.
A single bench led by Justice Krishnan Ramasamy observed that the principles of natural justice were violated since no opportunity for a personal hearing was granted before passing the adverse assessment order.
The court observed that Section 75(4) mandates a personal hearing, which was not provided in this case. The court found that since the assessment order was set aside, the attachment of the bank account could not be sustained.
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Therefore, the court quashed the impugned assessment order and remanded the matter to the GST authorities for fresh adjudication, and the attachment of the petitioner’s bank account was lifted immediately.
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