Facts of the Case

The petitioners challenged an assessment order dated 04.03.2022 passed under Section 73 of the Gujarat Goods and Services Tax Act, 2017. The principal grievance was that the assessment order had been passed without granting any opportunity of personal hearing as mandated under Section 75(4) of the GST Act.

The petitioners further submitted that they had already filed an application dated 20.04.2022 before the authorities pointing out a calculation error in determining the GST liability. According to them, the error materially affected the tax demand and required rectification.

When the matter initially came before the High Court, notice was issued and liberty was granted to the authorities to examine the petitioners' request regarding the calculation error. Subsequently, during the final hearing, both parties agreed regarding the correct tax computation, though the department expressed practical difficulty in uploading the rectification order online.

 

Issues Involved

  1. Whether an assessment order passed under Section 73 without granting an opportunity of hearing violates Section 75(4) of the GST Act.
  2. Whether an admitted calculation error in tax computation should be rectified by the GST authorities.
  3. Whether manual rectification and manual payment could be permitted where online rectification was technically not feasible.

 

Petitioner's Arguments

  • The assessment order under Section 73 was passed without granting any opportunity of hearing, contrary to the mandatory requirement contained in Section 75(4) of the GST Act.
  • The petitioners had already submitted a rectification application highlighting a significant calculation mistake.
  • The tax demand was incorrectly computed and therefore required correction before enforcing recovery.
  • Since the calculation error went to the root of the assessment, the authority ought to rectify the mistake.

 

Respondent's Arguments

  • During the final hearing, the State did not dispute the revised calculation of tax.
  • The respondents submitted that although the tax computation stood agreed between both sides, technical constraints prevented uploading the rectification order on the GST portal.
  • The department requested appropriate directions to enable manual compliance.

 

Court's Findings / Order

The Gujarat High Court observed that during the final hearing both parties had reached consensus regarding the correct tax liability.

Considering the practical difficulty faced by the department in uploading the rectification order electronically, the Court directed as follows:

  • For Assessment Year 2017-18, the petitioner was permitted to make manual payment of ₹6,12,956/-.
  • The GST authorities were directed to issue the manual rectification order through e-mode within two weeks.
  • The petitioner was directed to make payment within one week thereafter.
  • The Special Civil Application was accordingly disposed of.

The Court also took note that Section 75(4) mandates granting an opportunity of hearing where an adverse decision is proposed and acknowledged that the petitioner's grievance regarding denial of hearing had initially justified issuance of notice.

 

Important Clarification

  • Section 75(4) embodies the principle of natural justice and requires the GST authority to provide an opportunity of hearing before passing an adverse assessment order.
  • Where both parties agree regarding the correct tax computation, the High Court may facilitate practical implementation of rectification.
  • Technical limitations of the GST portal cannot prevent correction of an admitted calculation error.
  • Manual rectification and manual payment may be permitted where online rectification is not immediately feasible.
  • Courts may issue practical directions to ensure that procedural or technical hurdles do not defeat substantive justice.

 

Sections Involved

  • Section 73 – Determination of tax not paid, short paid, erroneously refunded or input tax credit wrongly availed or utilized (without fraud)
  • Section 75(4) – Mandatory opportunity of hearing before passing an adverse order
  • Gujarat Goods and Services Tax Act, 2017


Link to Download the Order https://www.mytaxexpert.co.in/uploads/1782893299_66.pdf

 

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