K Madhusudan Reddy vs. The State Of Andhra Pradesh

Held

The Court held that the impugned assessment order dated December 13, 2025, is set aside. The primary reason for this decision is the violation of the principles of natural justice due to the non-issuance of a personal hearing to the petitioner before passing the assessment order, as mandated by Section 75(4) of the GST Act. The Court found that after issuing the show cause notice, the 4th respondent failed to provide the petitioner with an opportunity for a personal hearing, which is considered fatal to the assessment proceedings. Consequently, the matter is remanded back to the 4th respondent for fresh consideration. The 4th respondent is directed to issue notice, afford an opportunity of personal hearing to the petitioner, and then pass appropriate orders in accordance with the law. The writ petition is allowed on this ground alone. The Court did not expressly leave any issue undecided, but the decision on the merits of the tax levied at 18% versus 5% was not reached due to the procedural defect.

Facts

The petitioner, K Madhusudan Reddy, a registered tax payer under the GST Act, filed a writ petition challenging an assessment order (Form GST DRC-07) dated December 13, 2025, passed by the 4th respondent. The petitioner is engaged in works contracts for State Government departments. For the period 2018-19, he executed earth excavation work and paid tax at 5%. The contractee department uploaded TDS particulars in GSTR-7 in 2024-2025 for these works. The petitioner claims he paid the tax liability at 5% even before the assessment order. The 4th respondent issued a notice (Form DRC-01) on September 25, 2025, followed by the impugned assessment order. The petitioner's primary ground for challenge is the lack of a personal hearing as required by Section 75(4) of the Act, along with other grounds.

Key Issues

1. Whether the assessment order dated December 13, 2025, passed by the 4th respondent is liable to be set aside on the ground that no personal hearing was granted to the petitioner as required under Section 75(4) of the GST Act? 2. Whether the assessment order is vitiated by a violation of the principles of natural justice due to the non-grant of a personal hearing? Petitioner's contentions: - The impugned order is liable to be set aside for not granting a personal hearing before its passing, violating Section 75(4) of the GST Act. - Despite the petitioner paying GST at 5% and the contractee department also paying tax at 5%, the 4th respondent levied tax at 18% on an estimation basis. - Various other grounds were also raised. Respondent's contentions: - The writ petition was filed on June 13, 2026, significantly after the order dated September 25, 2025, and there was no explanation for the delay, indicating laches. - The learned Assistant Government Pleader did not dispute the petitioner's contention regarding the non-issuance of a personal hearing and submitted that appropriate orders may be passed.