Simplified Explanation of the Judgment
The Patna High Court recently delivered a significant judgment in a writ petition filed by a business entity challenging a GST assessment order. The petitioner, engaged in business under the name Creative Builders, contested the validity of an order passed under the Central Goods and Services Tax (CGST) Act, claiming it was issued without providing the mandatory opportunity of a personal hearing.
The petitioner approached the Court on two main grounds:
- The order was time-barred due to limitation.
- The order was passed in violation of Section 75(4) of the GST Act, which mandates a personal hearing before finalizing the assessment when a taxpayer requests one or when adverse decisions are to be taken.
While the Court noted that the issue of limitation had already been addressed and rejected in earlier cases—especially M/s Barhonia Engicon Pvt. Ltd. v. Union of India & Ors., the matter of denial of personal hearing was treated seriously.
Section 75(4) of the CGST Act makes it compulsory for the authorities to offer a personal hearing before passing any order that might adversely affect the taxpayer. In this case, the petitioner argued that no such opportunity was provided, thereby violating this provision.
Acknowledging this violation, the Court set aside the assessment order dated 21.08.2023. The case has now been remanded back to the Assessing Officer with specific directions:
- The petitioner (assessee) must appear before the Assessing Officer on 06.01.2025.
- If he appears on that day or on the next adjourned date, a fresh assessment order must be passed only after granting a proper hearing.
- The new order must be issued within three months from the date of the judgment or within the statutory limitation period—whichever is later.
This ensures that the petitioner’s right to be heard, as guaranteed under tax laws, is protected, even if the merits of the assessment remain to be tested.
Significance or Implication of the Judgment
This judgment holds critical implications for both taxpayers and tax authorities:
- For taxpayers: It reinforces the statutory right to a personal hearing in GST assessments. Even if other grounds (like limitation) may not be accepted, procedural violations can lead to reassessment.
- For authorities: It sends a clear message that compliance with procedural safeguards, like personal hearings under Section 75(4), is non-negotiable. Skipping this step—even if inadvertently—can render the entire assessment invalid.
- For the legal ecosystem: The judgment strengthens the principle of “audi alteram partem”—the right to be heard—within the framework of fiscal statutes.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Whether the GST assessment order was passed within the period of limitation
✅ Court’s Decision: Already answered against the petitioner in earlier connected cases like CWJC No. 4180 of 2024.
✅ Reasoning: The argument on limitation was previously adjudicated in M/s Barhonia Engicon Pvt. Ltd. v. Union of India & Ors. and rejected. - Whether the absence of a personal hearing under Section 75(4) invalidates the assessment order
✅ Court’s Decision: Yes, assessment order was set aside.
✅ Reasoning: The statutory requirement of a personal hearing was not followed. This is a violation of procedural fairness and renders the order unsustainable.
Judgments Referred by Parties
- M/s Barhonia Engicon Private Limited v. Union of India & Ors., CWJC No. 4180 of 2024, Judgment dated 27.11.2024
Judgments Relied Upon or Cited by Court
- M/s Barhonia Engicon Private Limited v. Union of India & Ors., CWJC No. 4180 of 2024
Case Title
Shri Ishan Ali v. Union of India & Ors.
Case Number
CWJC No. 19227 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
For the Petitioner(s): None appeared
For the Respondent(s): Dr. Anshuman Singh, Sr. Counsel; Additional Solicitor General
Link to Judgment
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