Penalty imposed through rectification order can’t be levied without providing opportunity of hearing: HC

Case Details: Spy Agro Industries Ltd. v. Union of India - [2022] 139 taxmann.com 69 (Andhra Pradesh)

Judiciary and Counsel Details

• • C. Praveen Kumar & Smt. V. Sujatha, JJ.
  • Dr M.V.K. Moorthy, Ld. Senior Counsel & P. Rosi Reddy, Ld. Counsel for the Petitioner.
  • N. Harinath & S.V.S. Prasada Rao, Ld. Standing Counsel for the Respondent.

Facts of the Case

The petitioner didn’t file GST returns and it was directed to file returns but it didn’t file returns. The best judgment assessment order was passed by the department for failure to file returns. However, another para relating to penalty was subsequently inserted in assessment order by order of rectification. It filed writ petition to quash rectification order imposing penalty.

High Court Held

The Honorable High Court observed that the penalty imposed in rectification order was an additional liability as no penalty was imposed in assessment order. However, the opportunity of hearing was not provided while imposing penalty and the impugned order substantially affected the petitioner by imposing penalty which was not a part of demand in assessment order. Therefore, such order passed without providing opportunity of hearing was not sustainable and liable to be set aside.