Unaware of Cess Liability During Early GST Implementation Period: Madras HC orders Personal Hearing on 15% Pre-deposit [Read Order]

The Madras High Court ordered the Personal Hearing as demanded by the petitioner on 15% Pre-deposit condition in matter of unaware of cess liability during the initial period of the GST implementation. 

The bench of Justice Senthilkumar Ramamoorthy observed that Section 75(4) of the GST (Goods and Services Tax Act) mandates that a personal hearing be provided if an order adverse to the taxpayer is proposed to be issued.

The petitioner, represented by its counsel, argued that despite admitting to liability for the cess, they were not provided with a personal hearing before the issuance of the impugned order. It was emphasized that during the initial stages of GST implementation, the petitioner was unaware of the specific liability under contention.

On contrary, the respondent’s counsel contended that since the petitioner admitted liability, there was no substantive basis for interference with the order.

The court noted that while the petitioner had responded to a show cause notice with detailed information, the opportunity for a personal hearing was not extended, citing the petitioner's failure to request one. However, the court observed that Section 75(4) of the GST Act mandates a personal hearing when an adverse order is contemplated against the taxpayer.

The bench set aside the order dated 29th December 2023, citing procedural deficiencies. The court ordered the matter to be remanded back to the authorities for reconsideration under specific conditions. The petitioner was directed to remit 15% of the cess amount within two weeks and submit a detailed reply to the show cause notice within the same period.

Furthermore, upon receipt of the petitioner's reply and the requisite remittance, the tax authorities were instructed to provide a reasonable opportunity to the petitioner, including a personal hearing. A fresh order was mandated to be issued within three months from the receipt of the petitioner's response.

The Madras High Court also lifted any bank attachments that may have been enforced due to the initial assessment order being set aside. Accordingly, the writ petition was disposed of.

Mr.P.V.Sudakar and Mr.G.Subramanian appeared for the petitioner, while Mrs.K.Vasanthamala, Govt. Adv. (T) appeared for the respondent-department.

To Read the full text of the Order CLICK HERE

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