Works Contract Assessment Order Set Aside for Lack of Proper Notice and Personal Hearing
Issue: Whether an assessment order for a works contract is valid when the assessee was not provided with proper notice of the personal hearing, thereby affecting their ability to present their case for exemption.
Facts:
- The assessee, engaged in road works, bridge construction, and irrigation projects, received a show cause notice demanding tax on the turnover reported in their income tax returns for 2015-16 to 2016-17.
- The assessee filed objections to the notice, but an assessment order was passed without granting a personal hearing.
- The assessee claimed that the lack of a personal hearing prejudiced their case, as they could not explain their claim for exemption.
- It was discovered that the email ID used for the notice did not belong to the assessee, and postal notices were returned undelivered.
Decision:
- The court set aside the assessment order without delving into the merits of the case.
- The court directed the respondent authority to issue a fresh notice to the assessee, scheduling a personal hearing.
- The notice was to be sent to the assessee’s correct email ID as per GST records.
Key Takeaways:
- This case highlights the importance of providing proper notice and an opportunity for a personal hearing in GST assessments, especially when exemptions are claimed.
- Failure to ensure proper communication and deny a personal hearing can invalidate the assessment order.1
- The decision emphasizes the need for authorities to use accurate contact information and ensure that assessees are given a fair chance to present their case before an order is passed.
HIGH COURT OF ANDHRA PRADESH
Bhagirath Infra Projects (AP) (P.) Ltd.
v.
Assistant Commissioner of Central Tax
R. Raghunandan Rao and MAHESWARA RAO KUNCHEAM, JJ.
WRIT PETITION NO: 17209 of 2024
JANUARY 22, 2025
A. Sarveswar Rao for the Petitioner. Santhi Chandra, Sr. Standing Counsel and J.U.M.V. Prasad, Central Government Counsel for the Respondent.
ORDER
R. Raghunandan Rao, J.- Heard Sri A. Sarveswar Row, learned counsel appearing for the petitioner, Smt. Santi Chandra, learned Standing Counsel, appearing for respondent No.1 and J.U.M.V. Prasad, learned counsel appearing for respondent Nos.2 and 3.
2. The petitioner is involved in the business of execution of road works and construction of bridges and irrigation works. A show cause notice dated 11.12.2020 was received by the petitioner demanding service tax on the turnover reported in the income tax returns for the financial year 2015-16 and 2016-17. The petitioner filed his objections to this show cause notice. Thereafter, the petitioner received the impugned order of assessment, dated 26.03.2024.
3. It is the case of the petitioner that the petitioner did not receive any notice of personal hearing, after the submission of his objections and the lack of such personal hearing is prejudicially affect his case, in as much as, the assessing authority could not appreciate the exemption sought by the petitioner under notification No.25/2012, dated 20.06.2012, issued by the Central Government.
4. Smt. Santi Chandra, learned Standing Counsel for the Revenue, has filed a Memo dated 25.11.2024 bearing USR No.108969 of 2024. Copies of the personal hearing intimation letter as well as the printouts of service of notice on the mail ID of the petitioner are enclosed to this Memo.
5. The learned Standing Counsel, on the basis of these documents, would submit that notices were served on the petitioner and the contention of violation of principles of natural justice and violation of the requirement of grant of personal hearing is not maintainable.
6. Sri A. Sarveswar Row, learned counsel appearing for the petitioner would submit that the Mail ID to which the message had been sent, does not belong to the petitioner and it is also not the Mail ID, which is registered with the GST authorities. He would further submit that notices that were said to have been sent by post, even according to the postal report filed by the respondents, were returned unserved and as such there was no service of notice either by way of e-mail or by way of post.
7. In view of the aforesaid disputed questions of fact, this Court, without going into these issues, deems it appropriate to dispose of this writ petition with the following directions.
| 1. | The impugned order dated 26.03.2024 is set aside. |
| 2. | The 1st respondent shall issue a fresh notice to the petitioner fixing a date of personal hearing. |
| 3. | This notice shall be sent by e-mail to bhagirathnnv@gmail.com, which is said to be the e-mail ID in the GST records. |
| 4. | The petitioner, upon receipt of such notice of personal hearing, shall appear before the 1st respondent and set out its objections through its authorized representative. |
| 5. | The 1st respondent shall then be free to consider and pass appropriate orders, after hearing the petitioner. |
| 6. | In view of the peculiar circumstances of this case, the question of limitation shall not be raised by the petitioner. |
8. With the above directions, the writ petition is disposed of. There shall be no order as to costs. As a sequel, pending miscellaneous applications, if any, shall stand closed.