Simplified Explanation of the Judgment
In a recent decision, the Patna High Court emphasized the importance of granting a personal hearing before finalizing tax assessments under the Goods and Services Tax (GST) law. The petitioner in this case—an incorporated company—challenged an assessment order issued by the tax authorities, arguing that it was passed without giving the company a proper opportunity to be heard.
This case revolves around the interpretation and application of Section 75(4) of the GST Acts, which mandates that if any adverse decision is to be made against a taxpayer, they must be given a chance for a personal hearing. The petitioner contended that this legal requirement was ignored by the tax authorities while issuing the assessment order and the demand notice in Form GST DRC-07 dated 26.04.2024.
The High Court referred to an earlier decision in CWJC No. 4180 of 2024 – M/s Barhonia Engicon Private Limited v. Union of India and Ors., where the same legal issue was discussed. In that case, the Court had already clarified that denial of a personal hearing constitutes a violation of natural justice and is contrary to the statutory requirements under the GST laws.
Taking guidance from the previous ruling, the Court found that the petitioner was right in claiming a breach of the statutory mandate. The Court held that the assessment order and the demand notice issued without giving a personal hearing must be treated as invalid.
Accordingly, the Court quashed the impugned order and remanded the case back to the Assessing Officer. It directed the petitioner to appear before the officer on a specific date—15.01.2025. The officer has been ordered to grant a personal hearing and then pass a fresh assessment order within three months from the date of judgment or within the legal time limit, whichever is later.
This judgment serves as a reminder to the tax authorities that procedural fairness and adherence to statutory safeguards cannot be bypassed in GST assessments. It also reassures taxpayers that courts will step in to protect their rights when due process is violated.
Significance or Implication of the Judgment
This judgment is significant for businesses and individuals facing GST assessments, particularly in Bihar. The Court reinforced that:
- Authorities must follow due process before issuing assessment orders.
- A personal hearing is not a formality—it is a legal right under the GST Acts.
- Any violation of this right makes the assessment order liable to be quashed.
For government authorities, this decision serves as a strict reminder to respect statutory procedures and natural justice. It also protects businesses from abrupt or unfair tax demands and enhances confidence in the rule of law.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Issue: Whether the assessment order passed without granting a personal hearing under Section 75(4) of the GST Acts is valid.
- Court’s Decision: No. The assessment order was passed in violation of the statutory requirement for a personal hearing and hence cannot stand.
- Reasoning: Section 75(4) clearly requires a hearing when an adverse decision is anticipated. The failure to provide this opportunity violates principles of natural justice.
Judgments Relied Upon or Cited by Court
- CWJC No. 4180 of 2024 – M/s Barhonia Engicon Private Limited v. Union of India and Ors. (Judgment dated 27.11.2024)
Case Title
- Siemens Limited v. Union of India & Ors.
Case Number
- CWJC No. 9212 of 2024
Coram and Names of Judges
- Hon’ble the Chief Justice K. Vinod Chandran
- Hon’ble Mr. Justice Partha Sarthy
Names of Advocates and Who They Appeared For
- Mr. D.V. Pathy, Advocate – for the petitioner
- Dr. K.N. Singh, ASG and Mr. Anshuman Singh, Sr. Standing Counsel, CGST & CX – for the respondents
Link to Judgment
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