Order to Be Set Aside to the Extent of ‘Security Wages’ as Issue Was Not in SCN and Raised Without Hearing to Assessee | HC

Case Details: Gem Granites vs. State Tax Officer - [2025] 172 taxmann.com 58 (Madras)

Judiciary and Counsel Details

• Krishnan Ramasamy, J.
• R. Vasumithran, for the Petitioner.
• Ms Amirta Poonkodi Dinakaran, Government Adv. for the Respondent.

Facts of the Case

The petitioner, a registered assessee under the Goods and Services Tax (GST) regime, filed a writ petition before the Madras High Court challenging the assessment order passed by the Assessing Authority (AA). The dispute arose when the AA issued a show cause notice (SCN) concerning Administration Expenses. However, in the final assessment order, the AA introduced a new issue of “Security Wages”, raising tax liabilities without prior notice or opportunity for the petitioner to respond. The petitioner contended that the demand on Security Wages was unsustainable as it was not part of the original SCN, thereby violating the principles of natural justice.

High Court Held

The Hon’ble Madras High Court held that the Assessing Authority cannot introduce a new issue in the final assessment order that was not included in the show cause notice. The court observed that the issue of Security Wages was raised only upon the production of documents by the petitioner, and prior to this, no reference to it existed in the SCN or any other communication. As a result, the petitioner was deprived of an opportunity to present its case, constituting a violation of the principles of natural justice. Accordingly, the court set aside the assessment order only to the extent of the issue of Security Wages while upholding the remainder of the order.