Facts of the Case

The Petitioner filed the present Writ Petition challenging the assessment order dated 11.05.2022 passed by the Assistant Commissioner (State Tax), Hindupur Circle, under Section 73 of the GST Act, 2017. Initially, an intimation in Form GST DRC-01A dated 23.02.2022 was issued alleging tax liability on electrical lighting or signalling equipment, to which the Petitioner submitted a reply on 09.03.2022.

Subsequently, the Department issued a Show Cause Notice in Form GST DRC-01 dated 12.04.2022, modifying the allegations and proposing tax liability on Mirror Assembly instead of the earlier goods.

The Petitioner submitted a detailed reply on 11.05.2022 and specifically requested a personal hearing before passing any final order. However, on the very same day, the authority passed a detailed 60-page assessment order, rejecting the Petitioner's explanation.

Aggrieved by the action of the Department, the Petitioner approached the Andhra Pradesh High Court by filing the present Writ Petition under Article 226 of the Constitution of India.

Issues Involved

  1. Whether the GST assessment order passed on the very same day as submission of the reply violates the principles of natural justice.
  2. Whether failure to grant an effective personal hearing despite a specific request renders the assessment order invalid.
  3. Whether the existence of an alternate appellate remedy bars the High Court from exercising jurisdiction under Article 226 where there is violation of natural justice.
  4. Whether the assessment order deserved to be quashed and remanded for fresh adjudication.

Petitioner's Arguments

The Petitioner mainly contended that:

  • A detailed explanation was submitted on 11.05.2022.
  • Along with the reply, a specific request for personal hearing was made.
  • Without granting an effective opportunity of hearing, the authority passed the impugned order on the very same day.
  • It was practically impossible for the authority to objectively consider the explanation and prepare a reasoned 60-page order within a few hours.
  • The impugned order appeared to have been prepared even before considering the Petitioner's reply.
  • Therefore, the assessment proceedings were conducted in complete violation of the principles of natural justice.

Respondent's Arguments

The Government Pleader submitted that:

  • There is no legal prohibition against passing an assessment order on the same day.
  • The authority had duly considered all the contentions raised by the Petitioner.
  • Proceedings indicated that the authorised representative of the Petitioner was present and no additional documents or submissions were proposed.
  • Hence, according to the Department, sufficient opportunity had already been afforded to the Petitioner.

Court Order / Findings

The Andhra Pradesh High Court allowed the Writ Petition and held as follows:

  • Although the Department claimed that the authorised representative had waived further submissions, the Petitioner had specifically sought a personal hearing in its written explanation.
  • Passing a detailed 60-page assessment order on the very day the explanation was received created serious doubt regarding whether the Petitioner's reply had been genuinely examined.
  • The Court observed that the explanations furnished by the Petitioner had not been properly dealt with in the assessment order.
  • Normally, the High Court does not entertain writ petitions where an effective appellate remedy exists.
  • However, one well-recognised exception is violation of the principles of natural justice.
  • Relying upon the Supreme Court judgment in Whirlpool Corporation v. Registrar of Trade Marks, the Court held that writ jurisdiction can be exercised despite the availability of an alternative remedy when there is violation of natural justice.
  • Since the impugned assessment order suffered from such violation, it could not be sustained.

Accordingly, the Court:

  • Set aside the assessment order dated 11.05.2022.
  • Remanded the matter to the Assistant Commissioner (ST), Hindupur Circle for fresh adjudication.
  • Directed the authority to provide proper hearing to the Petitioner and pass a fresh order strictly in accordance with law.
  • No order as to costs was made.

Important Clarification

This judgment reiterates important principles governing GST adjudication:

  • Personal hearing requested by a taxpayer must be meaningfully provided before passing an adverse order.
  • Passing an elaborate assessment order immediately after receipt of a reply may indicate lack of proper consideration of the taxpayer's defence.
  • Availability of an appellate remedy does not bar writ jurisdiction where there is a clear violation of the principles of natural justice.
  • Authorities exercising powers under Section 73 of the GST Act are required to follow fair procedure and provide adequate opportunity before determining tax liability.
  • The decision reinforces that adherence to natural justice remains fundamental even in GST assessment proceedings.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017
  • Section 73 of the Andhra Pradesh Goods and Services Tax Act, 2017
  • Article 226 of the Constitution of India
  • Form GST DRC-01A
  • Form GST DRC-01

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785569837_2543compressed.pdf  

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