Court quashes GST order for non-compliance with statutory hearing requirement.

Case Name:

The Piku Saha v. The State of West Bengal & Ors.(High Court of Calcutta)

Key Takeaways:

- The revenue authority did not mention the date, time, and venue for a personal hearing in the show cause notice issued to the appellant (a registered dealer). - The authority passed the assessment order under Section 74 of the WBGST/CGST Act without providing a hearing opportunity as mandated by Section 75(4). - The court held that non-compliance with the statutory hearing requirement under Section 75(4) renders the assessment order unsustainable. **Issue:** Whether the assessment order passed without providing a statutory hearing opportunity can be sustained. **Facts:** - The appellant is a registered dealer under the WBGST/CGST Act engaged in works contracts. - For FY 2021-22, a show cause notice was issued to the appellant under Section 74, but it did not mention the date, time, and venue for a personal hearing. - Without providing a hearing opportunity, the Assistant Commissioner passed an assessment order dated 9.12.2022 under Section 74, creating a GST and penalty liability of Rs. 14,64,673.60/-. - The appellant challenged the order through a writ petition, which was dismissed by the Single Judge. **Arguments:** - Appellant: The assessment order was passed without providing a statutory hearing opportunity as required under Section 75(4) of the WBGST/CGST Act. - State Respondents: Admitted the non-compliance with the statutory mandate under Section 75(4). **Key Legal Precedent:** The court relied on its separate judgment in MAT/205/2023, where it held that an opportunity of hearing under Section 75(4) is a statutory mandate, and non-compliance renders the order under Section 73 unsustainable. **Judgement:** The court allowed the appeal, set aside the Single Judge's order, and quashed the assessment order dated 9.12.2022. The matter was remitted back to the Assistant Commissioner with a direction to pass a fresh order after providing a reasonable hearing opportunity to the appellant. The appellant was permitted to submit a reply to the show cause notice within three weeks. **FAQs:** Q: What was the main issue in this case? A: The main issue was whether the assessment order passed without providing a statutory hearing opportunity under Section 75(4) of the WBGST/CGST Act can be sustained. Q: Why did the court quash the assessment order? A: The court quashed the assessment order because the revenue authority failed to comply with the statutory mandate of providing a hearing opportunity under Section 75(4) before passing the order. Q: What was the court's direction to the revenue authority? A: The court remitted the matter back to the Assistant Commissioner with a direction to pass a fresh order after providing a reasonable hearing opportunity to the appellant. Q: What was the legal precedent relied upon by the court? A: The court relied on its separate judgment in MAT/205/2023, where it held that non-compliance with the statutory hearing requirement under Section 75(4) renders the order under Section 73 unsustainable.

Heard Mr. Himangshu Kumar Ray, learned Counsel for the appellant and Mr. Subir Kumar Saha, learned Counsel for the State respondents.

This appeal has been filed praying to set aside the judgment and order dated 18.11.2023 in WPA/1864/2023 (Piku Saha –Vs.- The State of West Bengal & Ors.) passed by the learned Single Judge, whereby the writ petition filed by the appellant herein was dismissed. Aggrieved, the petitioner has filed the present appeal.

We have heard the learned Counsel for the parties and perused the record of this appeal.

Briefly stated facts of the present case are that the appellant/petitioner is a dealer registered under WBGST Act/CGST Act, 2017 engaged in works contract. For the financial year 2021-22, a show cause notice dated 01.09.2022 under Section 74 of the WBGST/CGST Act was issued by the proper officer to the petitioner requiring him to appear for personal hearing either in person or through authorized representative on the date, time and venue mentioned in the table attached to the notice. Perusal of the table shows that in the aforesaid show cause notice the proper officer, i.e., the Assistant Commissioner, Jalpaiguri, West Bengal has specifically not mentioned the date, time and venue of personal hearing. The aforesaid notice was followed by an order dated 9.12.2022 under Section 74 of the WBGST/CGST Act, 2017 creating liability of WBGST,CGST and penalty totaling Rs.14,64,673.60/-.

The facts as aforementioned could not be disputed by learned State Advocate that an opportunity of hearing as contemplated under Section 75(4) of the WBGST/CGST Act was not afforded by the proper officer to the appellant/ petitioner before passing the impugned adjudication order/assessment order for the financial year 2021-22 dated 9.12.2022 under Section 74 of the Act. Thus, non-compliance of statutory mandate under Section 75(4) of the WBGST/CGST Act has been admitted by the State respondents.

On similar set of facts an appeal being MAT/205/2023 has been allowed by us today by a separate judgment in which we have held that an opportunity of hearing as contemplated under Section 75(4) of the WBGST/CGST Act is the statutory mandate and in absence of compliance of the statutory mandate, the order passed by the proper officer under Section 73 of the WBGST/CGST Act, cannot be sustained. Respectfully following the judgment passed in the aforesaid case, this appeal also deserves to be allowed.

For all the reasons aforestated, the impugned judgment dated 18.11.2023 in WPA/1864/2023 (Piku Saha –Vs.- The State of West Bengal & Ors.) passed by the learned Single Judge cannot be sustained and is hereby set aside. The impugned order dated 9.12.2022 under Section 74 of the WBGST/CGST Act for the financial year 2021-22 passed by the proper officer/Assistant Commissioner, Jalpaiguri, West Bengal, cannot be sustained on account of non-compliance of statutory mandate of Section 75(4) of the WBGST/CGST Act, 2017 and is consequently hereby quashed.

The appeal and the writ petition are allowed. Matter is remitted back to the concerned Assistant Commissioner with a direction to pass an order afresh in accordance with law, after affording reasonable opportunity of hearing to the appellant/petitioner. The appellant/petitioner is permitted to submit reply to the show cause notice within three weeks from today before the concerned proper officer/Assistant Commissioner, along with a certified copy of this order.

(Surya Prakash Kesarwani, J.)

(Rai Chattopadhyay, J.)