GST Personal Hearing Notice sent through Registered Post: Madras HC orders to grant Hearing on 15% Pre-deposit [Read Order]

The Madras High Court mandated that a personal hearing opportunity be granted concerning the 15% pre-deposit condition. This decision followed the court's observation that the GST ( Goods and Services Tax ) department had sent the personal hearing notice via registered post. The court nullified the previous order, citing the absence of a hearing before the order was issued.

In this writ petition, the petitioner, Abi Constructions challenged an original order dated October 30, 2023, on the grounds that they did not have a reasonable opportunity to contest the tax demand on its merits.

The petitioner asserted that the show cause notice and other communications related to the impugned assessment order were only uploaded on the GST portal and not communicated through any other means. Consequently, the petitioner claimed they were unaware of the proceedings and could not participate.

The petitioner's counsel, Ms. Aparna Nandakumar submitted that the tax proposal relates to a mismatch between the petitioner's GSTR-3B returns and the GSTR-7 return filed by the recipient of construction services.

The counsel further explained that this mismatch occurred because the recipient accounted for the services in the 2021-22 assessment period, while the petitioner recorded the transactions in 2022-23 when payments were received.

The respondent's counsel contended that reminders were sent to the petitioner via Registered Post with Acknowledgment Due ( RPAD ), which was received by the petitioner on June 1, 2023.

It was also pointed out that when the recipient of services files Form GSTR-7, the petitioner would have received credit in their electronic cash ledger, making the petitioner's contention untenable.

The High Court noted that the tax proposal was confirmed because the petitioner did not respond to the show cause notice by filing objections. The order indicates that a personal hearing notice dated March 10, 2023, and a reminder dated May 29, 2023, were sent by RPAD, with the latter received by the petitioner on June 1, 2023.

Further stated that the petitioner's explanation that they were unaware of the notices due to their upload on the GST portal alone cannot be accepted.

However, a Single bench of Justice Senthilkumar Ramamoorthy also stated that it is apparent that the tax proposal was confirmed without the petitioner being heard, imposing liability under Section 74 of the applicable GST enactments. In the interest of justice, an opportunity should be provided to the petitioner under certain conditions.

The petitioner's counsel has agreed to remit 15% of the disputed tax demand as a condition for remand. Therefore, the impugned order was set aside, provided that the petitioner remits 15% of the disputed tax demand within fifteen days from the receipt of a copy of this order. Within this period, the petitioner is also directed to submit a reply to the show cause notice.

The first respondent-The State Tax Officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months upon receival of the pre-deposit and receipt of the petitioner's reply.

Mr. C. Harsha Raj, Addl. Govt. Pleader appeared  for R1 Mr.Ramesh Kutty Standing Senior Counsel appeared for R2.

To Read the full text of the Order CLICK HERE

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