Madras HC cancels GST assessment
M/s.US Electricals,, vs. Revenue [W.P. No. 6262 of 2025]
Background of the Case
The appellant M/s. US Electricals was issued a show cause notice under Section 73 of the GST Act, 2017, citing discrepancies between the turnover declared in the appellant’s GSTR-3B and the TDS deductions shown in Form 26AS of the Income Tax Act. The appellant was requested to submit documents for verification. However, the appellant was unaware of the notice due to a lack of access to the GST portal and only became aware of the notice when informed over the phone by the respondent in December 2023. The appellant responded with a clarification and requested a personal hearing. Subsequently the assessment order passed dated 05.02.2025. The appellant filed the writ petition under Article 226 of the Constitution of India, seeking the quashing of this order and a direction to reconsider the matter afresh.
Arguments by the Appellant
The appellant contended that despite providing a detailed reply to the show cause notice, the respondent passed the assessment order on the same day, without considering the response or offering a personal hearing. This, the appellant argued, was a violation of the principles of natural justice. Furthermore, the appellant filed a rectification application, which was also rejected on 05.02.2025, and the disputed tax liability was recovered by debiting the appellant’s e-credit ledger. The appellant, thus, filed the writ petition to challenge the validity of the order and sought a fresh hearing.
Respondent’s Response
The respondent’s, Revenue acknowledged the procedural lapse. They conceded that the assessment order was passed without providing the appellant an opportunity for a personal hearing and that this was a mistake on part of the authorities. They further suggested that if the court deems it appropriate, the case should be reconsidered in accordance with the proper procedure.
Court Findings and Decision
The Madras High Court observed that the assessment order had been passed without due consideration of the reply filed by the appellant, and more critically, without providing the appellant an opportunity for a personal hearing. The court noted that this action violated Section 75(4) of the Central Goods and Services Tax Act, 2017, which mandates that a personal hearing should be provided before passing an order.
The court emphasized that the appellant was denied the fundamental right to establish their case, thereby infringing upon the principles of natural justice. Consequently, the court decided to set aside the impugned assessment order and directed the respondent to reconsider the case. The respondent was ordered to consider the appellant’s reply and objections, schedule a personal hearing, and pass a fresh order based on the merits of the case. The court directed that this process be completed expeditiously, preferably within three weeks from the receipt of the court’s order.
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Madras HC cancels GST assessment
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