Personal Hearing To Be Granted In All Matters Prior To Finalisation Of Assessment: Madras High Court

The Madras High Court has held that personal hearings shall be granted in all matters prior to the finalization of assessments, except where the stand of the assessee is intended to be accepted by the department.

The single bench of Justice Anitha Sumanth has observed that the officer has grossly erred in proceeding to finalize the assessment in violation of the principles of natural justice.

The petitioner/assessee company is in the business 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 subcontractor engaged in activities subcontracted by the main contractors as a consequence of contracts entered into by the former with the government.

The petitioner was awarded a subcontract for the construction of a new division office for the Tamil Nadu Housing Board. The assignment was made as a back-to-back contract under an agreement dated November 25, 2020. The value of the main contract between the contractor and the Housing Board was a sum of Rs. 8,20,04,631 whereas his agreement was for a sum of Rs. 7,86,99,262.

The claim of the petitioner is an avowed entitlement to the benefit of the notification dated June 28, 2017, which grants the benefit of the concessional rate of composite supply of works contract to a subcontractor of the main contractor who provides services to the central or state governments, union territories, local authorities, government authorities, or government entities.

The petitioner asked for a hearing in person prior to the issue being decided. The officer has brushed aside the request for a personal hearing, instead proceeding to pass the order without hearing the petitioner.

Section 75(4), which deals with the general procedure to be followed in the determination of tax, specifically mandates that an opportunity for a 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 a person.

The court held that the personal hearing had not been fixed and that there was a gross flaw in the order.

Case Title: SKS Builders and Promoters Versus Assistant Commissioner (ST)

Citation: 2023 LiveLaw (Mad) 84

Case No: W.P.Nos.6801 and 6805 of 2023 and WMP Nos.6894 and 6899 of 2023

Date: 06.03.2023

Counsel For Petitioner: N.Murali

Counsel For Respondent: Haja Nazirudeen

Click Here To Read The Order