Andhra Pradesh High Court Sets Asides Assessment Order On Non-Compliance Of CGST Act

Andhra Pradesh High Court Sets Asides Assessment Order On Non-Compliance Of CGST Act

The Court observed that when an adverse decision is contemplated against an assessee, the opportunity of hearing to such an assessee is indispensable

The Andhra Pradesh High Court has set aside an assessment order on non-compliance with the mandatory requirements of the law as provided u/S 75(4) of the Central Goods and Services Tax Act, 2017 (CGST Act).

The matter titled M/s Ocean Sparkle Limited v Assistant Commissioner & Anr, was placed before a Division Bench of the High Court of Andhra Pradesh comprising Justices A. V. Sesha Sai and J. Umadevi.

The assessment order passed against the Petitioner – Company levying a tax demand of ₹57,43,679 along with equal penalty was challenged in this writ petition. The Petitioner – Company contended that the assessment order was liable to be set aside on the sole ground of non-compliance of mandatory provisions of sub-section (4) of Section 75 of the Central Goods and Services Tax Act, 2017 (CGST Act).

On the other hand, the Respondent – Authorities submitted that it was not open for the Petitioner to raise any objection regarding the assessment order since the Petitioner had failed to respond to the show-cause notice issued to him prior to the passing of the order. The maintainability of the writ petition was also questioned by the Respondent – Authorities in view of the availability of an alternative remedy of appeal u/S 107 of the CGST Act, 2017 before the Appellate Authority but the Court rejected such a plea.

The Court chose not to go into the reasons why the Petitioner could not file objections to the show-cause notice within the stipulated time considering the facts and circumstances of the case.

In order to come to a conclusion, the bench referred to the provisions of the CGST Act, 2017, specifically Chapter 15, which deals with 'Demands and Recovery'. It found the provision u/S 75(4) of the Act, to be relevant to the issue at hand which is stated below:

"An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person."

The Court based on the above provision observed that when an adverse decision is contemplated against an assessee, the opportunity of hearing to such an assessee is indispensable and is required to be followed scrupulously.

The Court, therefore, set aside the assessment order on the ground that the course of action adopted by Respondent – Authorities was prejudicial to the interest of the Petitioner by not following the mandatory requirements of the law as provided u/S 75(4) of the CGST Act, 2017.