Personal Hearing under GST Act Mandatory not only when requested but also for Adverse Orders: Madras HC [Read Order]

In a recent and significant ruling, the Madras High Court observed that the Personal Hearing under Section 75(4) of GST Act ( Goods and Services Tax ), 2017 is mandatory not only when requested but also should be given to the proposed adverse orders.

The words of the Single bench of Justice Senthilkumar Ramamoorthy states as follows “Under sub-section (4) of Section 75 of applicable GST enactments, a personal hearing is mandatory not only when requested for but when an order adverse to the tax payer is proposed to be issued. In all these cases, the tax proposals were confirmed without the petitioner being provided a personal hearing.”

The Petitioner, J-Lin Constructions is engaged in the business of executing civil work contracts. Pursuant to an inspection of the petitioner's premises, show cause notice dated 07.07.2023 was issued to the petitioner. Such show cause notice was replied to on 07.08.2023 and 28.08.2023.

Orders in original were issued on 19.09.2023. The petitioner filed rectification petitions in respect thereof and such rectification petitions were rejected by orders dated 24.04.2024. Further, the petitioner filed a writ petition before the Madras High Court challenging the orders on ground that the petitioner was not provided a personal hearing.

The counsel for the petitioner submitted that the petitioner contended in the reply to the show cause notice that the ingredients of Section 74 were not satisfied. He further submitted that the said reply was not taken into consideration and that no findings were recorded on the petitioner's contentions.

In addition, he asserted that no personal hearing was granted thereby violating sub-section (4) of Section 75 of applicable GST enactments.

On the contrary, the respondent’s counsel pointed out that a personal hearing was granted when the rectification petitions were disposed of. He also points out that the petitioner did not request for a personal hearing and that the petitioner checked the box for no personal hearing.

The court observed that under sub-section (4) of Section 75 of the applicable GST enactments, a personal hearing is mandatory not only when requested but also when an adverse order against the taxpayer is proposed. In this case, the GST liability was confirmed without providing the petitioner with a personal hearing. Due to this violation of a mandatory requirement, the impugned orders cannot be sustained.

Therefore, the impugned orders dated 19.09.2023 were set aside, and the matters were remanded for reconsideration. The petition was disposed of by directing the respondent-department to give the petitioner a reasonable opportunity, including a personal hearing, and then issue fresh orders within three months from the date of receipt of a copy of this order.

To Read the full text of the Order CLICK HERE

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