Andhra Pradesh HC Sets Aside GST Demand Over Improper Service of Notice

 Andhra Pradesh HC Sets Aside GST Demand Over Improper Service of Notice

The Andhra Pradesh High Court recently ruled in favor of Bhagirath Infra Projects (AP) (P.) Ltd., setting aside a GST demand due to improper service of notice. This case highlights the importance of procedural compliance and the right to a fair hearing.

Background:The petitioner, engaged in road works and construction, received a show cause notice on December 11, 2020, demanding service tax based on income tax returns for FY 2015-16 and 2016-17. Despite filing objections, the petitioner was issued an assessment order on March 26, 2024, without receiving a personal hearing.

Fact of the case 

The petitioner, engaged in road works, bridge construction, and irrigation projects, received a show cause notice demanding tax based on turnover reported in income tax returns for specific financial years. An assessment order was subsequently issued without granting the petitioner a personal hearing. Arguing that this denial of a hearing prejudiced his case—especially concerning an exemption claimed under a relevant notification—the petitioner challenged the order. The Revenue maintained that notices were properly served via email and post. However, it was proven that the email ID used did not belong to the petitioner, and the postal notices were returned undelivered. As a result, the petitioner approached the High Court, alleging a violation of natural justice and seeking relief.

Key Legal Issues

Violation of Principles of Natural Justice

The petitioner argued that no personal hearing was granted, affecting the case unfairly. The assessing authority failed to consider Notification No. 25/2012, which provided potential exemptions.

Dispute Over Notice Service

The Revenue submitted that notices were sent via email and post. However, the petitioner countered that:

• The email used was not registered with GST authorities.
• Postal notices were returned unserved.

Given these discrepancies, the court examined whether the service of notice met legal requirements.

Court's Ruling

The High Court ruled that the case involved disputed facts regarding service of notice and personal hearing. Consequently, it issued the following directives:

Directions by the Court

1. The assessment order dated March 26, 2024, was set aside.
2. The respondent must issue a fresh notice, setting a date for a personal hearing.
3. The notice must be sent to bhagirathnnv@gmail.com, the email ID registered with GST authorities.
4. Upon receiving the notice, the petitioner must attend the hearing and present objections through an authorized representative.
5. The respondent may pass a fresh order after due consideration.
6. Given the circumstances, limitation shall not be raised as a defense.

"The Hon’ble High Court held that the assessment order, issued without valid service of a personal hearing notice, violated the principles of natural justice. Emphasizing the importance of procedural fairness, the Court noted that proper notice and an opportunity to present one’s case are essential before issuing an adverse order. Consequently, the Court set aside the assessment order and directed the Revenue to issue a fresh notice, ensuring a scheduled personal hearing."

Conclusion

This judgment underscores the importance of proper service of notice and adherence to natural justice principles in GST matters. Businesses should ensure that their registered communication details are updated and actively monitor notices from tax authorities to avoid similar disputes.

"The Hon’ble High Court reaffirmed that issuing an assessment order without a properly served notice for a personal hearing constitutes a violation of natural justice. Emphasizing the importance of procedural fairness, the Court held that the petitioner must be given a fair opportunity to present his case before any adverse order is passed. Consequently, the assessment order was set aside, and the Revenue was directed to issue a fresh notice, ensuring due process by scheduling a personal hearing."

More read legal case law: Can High Courts Extend the GST Appeal Time Limit? Legal Analysis of A Case