W.P.(C) No.28911 of 2023

Facts of the Case

The petitioner, proprietrix of M/s. T & J Associates, challenged an assessment order (Exhibit P-4) dated 11.08.2023 passed under Section 73 of the Kerala GST Act for the year 2017-18. A show cause notice dated 22.06.2023 was issued, to which the petitioner filed a reply dated 06.07.2023, and specifically requested a personal hearing in the matter. Despite this request, the assessment was completed under Section 73 without affording any opportunity of personal hearing, prompting the petitioner to approach the Kerala High Court under Article 226.

Issues Involved

  1. Whether the assessment order was vitiated for failing to grant a personal hearing despite the petitioner's specific request.
  2. Whether such omission amounted to a violation of Section 75(4) of the Kerala GST Act.

Petitioner's Arguments

  • Counsel for the petitioner submitted that the sole ground of challenge was the failure to afford an opportunity of hearing as mandated under Section 75(4) of the GST Act, despite the petitioner having specifically requested one.

Respondent's Arguments

  • The Government Pleader for the respondents fairly did not dispute the petitioner's contention that no personal hearing had been granted despite the request.

Court Order / Findings

  • The Court referred to Section 75(4) of the GST Act, which mandates that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax, or where an adverse decision is contemplated.
  • Since the respondent did not dispute that the assessment was completed under Section 73 without affording the requested personal hearing, the Court found a clear violation of Section 75(4).
  • The impugned assessment order was set aside, and the matter remitted for a fresh assessment order after affording a personal hearing. The petitioner was directed to appear before the respondent on 20.09.2023 and make submissions with respect to the show cause notice, with no separate notice of hearing to be issued. The writ petition was allowed without costs.

Important Clarification

  • Section 75(4) of the GST Act creates a mandatory, non-discretionary obligation to grant a personal hearing wherever a written request is received from the taxpayer, or an adverse decision is contemplated — non-compliance vitiates the assessment regardless of other procedural compliance.
  • The requirement applies even where the assessing authority has otherwise followed the notice-and-reply process correctly; a hearing is not an optional courtesy but a distinct statutory safeguard that must be independently satisfied.
  • Where relief is granted for want of hearing, courts often fix a specific date for the taxpayer's appearance and dispense with a fresh hearing notice, to prevent further delay through repeated procedural lapses, and to ensure the remand results in an expeditious fresh order rather than a fresh round of notices.

Sections Involved

  • Section 73, Kerala GST Act, 2017 — determination of tax not paid or short paid, for reasons other than fraud, wilful misstatement or suppression.
  • Section 75(4), Kerala GST Act, 2017 — mandates an opportunity of personal hearing on written request or where an adverse decision is contemplated, regardless of whether the taxpayer has already filed a written reply.
  • Article 226, Constitution of India — invoked to challenge the assessment order for breach of this statutory hearing safeguard.

Decision – In Favour of

The decision is in favour of the assessee, with the assessment order set aside and the matter remitted for a fresh order after a personal hearing; the underlying tax demand itself was not examined on merits and remains open for reconsideration at the fresh hearing.

Case Details

Court: High Court of Kerala at Ernakulam
Case Number: W.P.(C) No.28911 of 2023
Coram: Hon'ble Mr. Justice Dinesh Kumar Singh
Date of Order: 05.09.2023

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