The Andhra Pradesh High Court has observed that, Issuing Notice for Hearing is a Statutory Requirement under Section 75(4) Of GST Act before Imposition of Tax or Penalty.
The petitioner executed certain works entrusted to it by M/s.TATA Projects Limited, and issued Tax Invoices to M/s.TATA Projects Limited. It is said that as per the terms of the agreement, the said Contractee has to pay Service Tax on the same to the petitioner on issue of Tax Invoices by the petitioner. Though, the petitioner issued Tax Invoices, the Contractee failed to pay G.S.T. amounts to the petitioner and withheld the same due to which the petitioner could not file its returns and pay the Taxes as the G.S.T. Portal will not accept the returns unless accompanied by payment of Taxes.
The Petitioner has contented that, the total G.S.T. liability for the works executed for the petitioner during the tax period is about Rs.1,85,84,695/-. A Garnishee Notice dated 11.09.2020, came to be issued to the Contractor stating that the petitioner has failed to pay Taxes, Penalty and Interest under the G.S.T. Act and directed them to pay the said amount. On coming to know about the order of the Assessment passed by the authority, the petitioner filed the present Writ Petition mainly on the ground that an opportunity of hearing should have been granted to the petitioner in terms of Sub-Section (4) of Section 75 of the SGST Act, 2017. He placed reliance on the judgment of this Court in W.P.No.9162 of 2021, dated 28.04.2021 in support of the same.
A division bench comprising of Justice C. Praveen Kumar and Justice V Sujatha observed that, “It is very much evident that an opportunity of hearing is required to be given where a request was made in writing to the person chargeable with taxes and penalty or where any adverse decision is contemplated against such person. Therefore, when the authority contemplates to pass an adverse order against any assessee, an opportunity of hearing is required to be given. Failure to do so, in our view, amounts to violation of principles of natural justice. In the instant case, admittedly no notice was given to the petitioner before contemplating to pass an adverse order. Such a course of caution is prejudicial to the interest of assessee and the same would be in violation of Sub-Section (4) of Section 75 of C.G.S.T. Act, 2017”.
While allowing the petition, the Court also observed that, “It is needless to mention that on the date so fixed either the petitioner or his authorized representative shall be present before the respondent no.1 for personal hearing. The entire exercise of giving notice, hearing and passing of the order should takes place as early as possible preferably within a period of four (4) weeks from the date of receipt of this order”.
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