High Court of Andhra Pradesh Ruling on Natural Justice in GST Assessment

 High Court of Andhra Pradesh Ruling on Natural Justice in GST Assessment

Introduction On January 22, 2025, the Andhra Pradesh High Court delivered a significant ruling in the case of Bhagirath Infra Projects (AP) (P.) Ltd. vs. Assistant Commissioner of Central Tax. This case highlights key legal principles regarding the service of notices and personal hearings in GST assessments. The decision emphasizes the importance of ensuring procedural fairness, particularly in cases where tax demands are based on discrepancies between income tax and GST returns.

Case Background Bhagirath Infra Projects is engaged in road construction, bridge building, and irrigation works. The dispute arose when the company received a show cause notice (SCN) on December 11, 2020, demanding service tax based on turnover declared in its income tax returns for the financial years 2015-16 and 2016-17. The petitioner filed objections, but subsequently received an adverse assessment order dated March 26, 2024, without a personal hearing.

Legal Issues Raised The petitioner challenged the assessment order on the following grounds:

1. No personal hearing was granted before the final order was passed.
2. The petitioner was unable to present its case regarding exemption under Notification No. 25/2012 dated June 20, 2012.
3. Notices for personal hearing were allegedly sent via email and post, but the petitioner contended that:
   • The email ID used was not the one registered with the GST authorities.
   • Postal notices were returned undelivered.

Revenue's Argument The Revenue submitted a memo on November 25, 2024, enclosing evidence of email notices and postal dispatch. Based on these documents, the Revenue contended that due process was followed, and the claim of a violation of natural justice was not maintainable.

High Court's Observations and Ruling The Court recognized the dispute over whether notices were validly served but refrained from making a factual determination on the matter. Instead, it set aside the impugned assessment order and directed the following steps:

1. The Revenue must issue a fresh notice to the petitioner, explicitly setting a date for a personal hearing.
2. The notice must be sent to the petitioner’s registered email ID (bhagirathnnv@gmail.com as per GST records).
3. Upon receiving the notice, the petitioner must appear before the authorities and present its objections through its authorized representative.
4. The authorities must consider the petitioner’s objections and issue a fresh order after due consideration.
5. Given the unique circumstances, the Court directed that the limitation period would not be a bar to fresh proceedings.

Key Takeaways from the Judgment

• Importance of Personal Hearing: The ruling reinforces that an opportunity for a personal hearing must be granted when a taxpayer’s objections raise substantial legal and factual issues.
• Proper Service of Notice: Authorities must ensure that notices are sent to the taxpayer’s officially registered email and postal addresses.
• Natural Justice in GST Proceedings: The judgment underlines that procedural lapses in tax assessments can lead to orders being quashed.
• Impact on Taxpayers: This decision provides relief to taxpayers facing adverse GST assessments due to procedural deficiencies in notice service and hearings.

Conclusion The Bhagirath Infra Projects case serves as a crucial precedent for ensuring procedural fairness in GST assessments. Taxpayers must verify their registered communication details and respond promptly to tax notices, while tax authorities must adhere to due process. This ruling highlights the judiciary’s commitment to upholding the principles of natural justice in taxation matters.