Granting of hearing opportunity is mandatory under Section 75(4) before passing of adverse order

Last updated: 20 August 2024

Quick Summary

The Karnataka High Court has ruled that providing an opportunity for a hearing is a mandatory requirement under Section 75(4) of the CGST Act. This applies whenever an authority is considering passing an adverse order, such as imposing tax or penalties, against an assessee. The court set aside an assessment order because the assessee was not given this crucial opportunity before the decision was made.

Court :
Karnataka High Court

Brief :
The Hon'ble Karnataka High Court in M/s. Bangalore Golf Club v. Commercial Tax Officer [W.P. No. 8050 of 2024 dated June 05, 2024], set aside the assessment order as no opportunity of hearing was granted to the Assessee before passing of adverse order, thereby holding that, it is mandatory to grant opportunity of hearing as required under section 75(4) of the CGST Act when an adverse order is being contemplated against the Assessee.

Citation :
W.P. No. 8050 of 2024 dated June 05, 2024

The Hon'ble Karnataka High Court in M/s. Bangalore Golf Club v. Commercial Tax Officer [W.P. No. 8050 of 2024 dated June 05, 2024], set aside the assessment order as no opportunity of hearing was granted to the Assessee before passing of adverse order, thereby holding that, it is mandatory to grant opportunity of hearing as required under section 75(4) of the CGST Act when an adverse order is being contemplated against the Assessee.

Facts

Bangalore Golf Club ("the Petitioner"), filed a writ petition against order dated December 29, 2023 ("the Impugned Order") passed by the Revenue department ("the Respondent") challenging the liability imposed on them under Section 73(9) of the CGST Act for the tax periods of 2017-18 and 2018-19 and also prayed for setting aside of the notifications dated 13.07.2022 and 06.04.2023. The Petitioner contended that the clubbing of financial years and passing a common order was impermissible. Further, it was argued that the Petitioner was not granted an opportunity of hearing in case of passing of adverse order as required under Section 75(4) of the CGST Act.

Issue

Whether it is mandatory to grant opportunity of hearing as required under section 75(4) of the CGST Act when an adverse order is being contemplated against the Assessee?

Held

The Hon'ble Karnataka High Court in W.P. No. 8050 of 2024 set aside the Impugned Order as no opportunity of hearing was granted by the Respondent which was required under section 75(4) of the CGST Act in case any order for levy of tax, penalty, or any other adverse decision is being contemplated against the Petitioner.

Relevant Provision

Section 75(4) of the CGST Act

Section 75: General provisions relating to the determination of tax

(4) 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.

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED

FAQ :

The Karnataka High Court ruled that it is mandatory to grant an opportunity of hearing under Section 75(4) of the CGST Act before passing any adverse order against an assessee.

Section 75(4) of the CGST Act is relevant, stating that an opportunity of hearing must be granted if a request is received or if an adverse decision is contemplated.

The assessment order was set aside by the Karnataka High Court because the assessee, Bangalore Golf Club, was not granted an opportunity of hearing before the adverse order was passed.

The ruling specifically applies when an adverse order, such as the levy of tax or penalty, is being contemplated against an assessee.