The Hon’ble High Court of Madras vide its order dated 06.03.2023 in the matter of SKS Builders And Promoters Represented By Its Managing Partner K. Sekar Vs. Assistant Commissioner (ST), Salem in W.P. Nos. 6801 and 6805 of 2023 and WMP No.s 6894 and 6899 of 2023, set aside the impugned orders passed finalising the assessment without affording an opportunity of personal hearing to the assessee. It was found the said orders are in violation of provisions of Section 75(4), which provides for a procedure that it is mandatory to provide a personal hearing where a request has been received from a taxable person or against whom any adverse decision is likely to be passed.
Facts of the Case: –
- That the petitioner is a company engaged in the activity of civil construction and is registered under the provisions of the Tamil Nadu Goods and Services Tax Act, 2017. The petitioner participates in Government tenders and is also a sub-contractor engaged in activity subcontracted by the main contractors as a consequence of contracts entered into by the former with the Government.
- That the petitioner was awarded a sub-contract for construction of a new division office building in T.S.No.2 & 4, SF 107/1, part of Block No.22, Ward No. AH of K. Santhanoor Village in KK Nagar neighbourhood scheme, Trichy East Taluk, Trichy for the Tamil Nadu Housing Board.
- That in pursuance of the agreement entered into by the main contractor with the Board on 28.08.2020, its assignment was as a back-to-back contract vide agreement dated 25.11.2020. The value of the main contract between the contractor and the Housing Board was for a sum of Rs.8,20,04,631/-, whereas his agreement was for a sum of Rs.7,86,99,262/-.
- That the main claim of the petitioner is its admitted entitlement to the benefit of Notification No. 11 of 2017 dated 28.06.2017, which provides for benefit of concessional rate of composite supply of works contract, as defined under 2(119) of CGST Act, 2017, to a sub-contractor to the main contractor who provides services as specified in item (iii) or (vi) to the Central or State Governments, Union Territory, Local Authority, Government authority or Government entity. According to the petitioner, its activities would be covered under vi (a) ‘which provides for A civil Structure or any other original works meant predominantly for use other for commerce, industry or any other business or profession.‘
- The Hon’ble Court after considering the submissions made & facts of the case, found that admittedly the case of the petitioner is that the documents were not placed for appreciation before the Assessing Officer, due to which the Assessing Authority could not have expected to appreciate the nature of contract without the copy of agreement between the parties. This position would be wholly relied upon by the State.
- It was found by the Hon’ble Court that another aspect of the matter is that the petitioner has not be heard before passing of the impugned order. A notice was issued initially which was superseded by a revised notice in Form GST DRC-01 dated 24.11.2022, whereby the Officer granted an opportunity of filing a representation with all documentary evidences within 30 days of receipt of notice simultaneously granting opportunity of hearing as well.
- That in the present case, admittedly, hearing was not fixed by date or time and this is a gross flaw in this order, which the Court is tired of pointing out. Moreover, the petitioner has also in compliance with the notice, filed a submission on 29.11.2022, though without any supporting documents. The Officer brushed aside the petitioner’s request for personal hearing, and proceeded to pass the impugned order without affording any opportunity of hearing to the petitioner.
- Further, apart from the above, Section 75(4) which deal with the general procedure to be followed in determination of tax, specifically mandate that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable to tax or penalty or where any adverse decision is contemplated as against such person.
- It was found by the Hon’ble Court that the substance of Section 75(4) is that a personal hearing shall be granted in all matters prior to finalisation of assessment except where the stand of the assessee is accepted by the department. Therefore, the Officer has grossly erred in proceeding to finalise the impugned assessment in violation of principles of natural justice.
The Hon’ble Court with the above findings, allowed the Writ petition by setting aside the impugned orders.
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