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Dharani Infra v. the State of Ap

Andhra Pradesh HC15 Jul 2025WP/17086/2025

Case brief

AI extract

What is this about?

Keywords: GST; Form GST DRC-07; Section 74 GST Act 2017; Section 75 GST Act; show cause notice; personal hearing; principles of natural justice; Annexure-IV; one time option; reduced rate of tax on construction services; remand compliance; disobedience of earlier writ directions; W.P. No. 26140/2022; Assistant Commissioner (ST) Kavali Circle; Assistant Commissioner (ST) Ongole-I; writ allowed; no costs; Article 226; Andhra Pradesh High Court.

What did the court decide?

Writ petition allowed: impugned Order dated 21.01.2025 set aside; liberty to the 2nd respondent to initiate afresh proceedings with appropriate notice and opportunity of hearing in accordance with Section 75 of the GST Act and to pass orders expeditiously; no order as to costs; pending miscellaneous applications, if any, stand closed. ¶68

Dharani Infra Vs the State of Ap — GST and Indirect Tax | Andhra Pradesh HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the petitioner's claim for levy of tax at the reduced rate, contingent on the genuineness of Annexure-IV, was rightly rejected in the order dated 21.01.2025. +1 more

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Ratio / Principle

In the remand proceedings, the report of the Assistant Commissioner (ST), Ongole-I ought to have been served on the petitioner and a personal hearing given thereafter; since the hearing notice was of 04.10.2022, predating the report dated 10.01.2025, it is obvious that no personal hearing was given to the petitioner after receipt of the report.

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Key takeaways

Under the provisions of the GST Act itself, a registered person is entitled to notice and a hearing whenever the authority proposes to pass an order adverse to the interest of the registered person.ratio¶66
There having been a violation of the directions of this Court dated 17.08.2023 as well as of the provisions of the GST Act, it is appropriate to set aside the impugned order dated 21.01.2025.ratio¶67

Detailed headnote1 paragraphs

High Court of Andhra Pradesh at Amaravati (Special Original Jurisdiction), W.P. No. 17086 of 2025, order dated 16.07.2025, per R. Raghunandan Rao J. (bench comprising R. Raghunandan Rao and Sumathi Jagadam JJ.) — allowed. The petitioner, a GST-registered provider of construction services, impugned the order dated 21.01.2025 in Form GST DRC-07 passed by the Assistant Commissioner (ST), Kavali Circle under section 74 of the GST Act 2017 for 15-10-2018 to 30-11-2020, rejecting its claim to pay tax at a reduced rate on the finding that its Annexure-IV option documents were not genuine and had not been submitted — a rejection recorded in remand proceedings pursuant to this Court's order dated 17.08.2023 in W.P. No. 26140/2022. Held: the report of the Assistant Commissioner (ST), Ongole-I dated 10.01.2025 ought to have been served on the petitioner and a personal hearing afforded thereafter; the hearing notice was of 04.10.2022, predating the report, so no post-report hearing occurred; the learned Assistant Government Pleader conceded that no proper show-cause notice was issued after the report. There being violation of this Court's earlier directions as well as of the stipulation in the GST Act that a registered person is entitled to notice and hearing before an adverse order, the impugned order was set aside, with liberty to the 2nd respondent to initiate fresh proceedings after notice and hearing in accordance with Section 75 of the GST Act expeditiously. No costs.

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APHC01019963202S

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

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(Special Original Jurisdiction)

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WEDNESDAY, THE SIXTEENTH DAY OF JULY TWO THOUSAND AND TWENTY FIVE

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PRESENT

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THE HON’BLE SRI JUSTICE R RAGHUNANDAN RAO ^

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AND

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THE HON’BLE SMT JUSTICE SUMATHI JAGADAM

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WRIT PETITION NO: 17086 OF 2025

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Between:

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M/s. Dharani Infra. Shop No. 1357, Sri Bapuji Market Complex, Ongole, Rep. by its Managing Partner, Sri. Lokireddy Subba Reddy, S/o. Hanuma Reddy, Aged about 44 Years. Prakasam District.

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...Petitioner

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AND

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The State of AP, Rep by its Principal Secretary, Revenue (CT) Department, Velagapudi, Amaravathi, Guntur District, Andhra Pradesh.

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The Assistant Commissioner (ST), Kavali Circle, SPSR Nellore District Andhra Pradesh.

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The Assistant Commissioner (ST), [Formerly Commercial Tax Officer] NO. 1 Circle, Ongole, Prakasam District Andhra Pradesh.

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...Respondents

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Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction particularly in the nature of Writ of MANDAMUS declaring the action of the Respondents more

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particularly after calling for the entire records relating to the impugned proceedings of the Assistant Commissioner (ST), Kavali Circle, Kavali dated 21-01-2025 in Form GST DRC -07 for the period 15-10-2018 to 30-11-2020 under section 74 of the GST Act 2017 without issue of show cause notice subsequent to 10-01-2025 without issuing of personal hearing notice where after and without supply of copy of the report of 10-01-2025 by holding the same as illegal, arbitrary, wilful disobedience of the directions of this Hon’ble Court dated 17-08-2023 in W.P. No. 26140/2022 and without authority of law, violative of articles 14, 19(1)(g),21 and 300-A of the Constitution of India.

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lA NO: 2 OF 2025

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of the impugned order of 21-01-2025 issued by the 2nd Respondent received on 24-01-2025 pending disposal of the writ petition or else the Petitioner would suffer serious loss.

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Counsel for the Petitioner: SRI M V J K KUMAR

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Counsel for the Respondents: GP FOR COMMERCIAL TAX The Court made the following order:

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APHC010199632025

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IN THE HIGH COURT OF ANDHRA PRADESH

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AT AMARAVATI

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[3541]

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(Special Original Jurisdiction)

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WEDNESDAY, THE SIXTEENTH DAY OF JULY TWO THOUSAND AND TWENTY FIVE

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PRESENT

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THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO

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THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM

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WRIT PETITION NO; 17086/2025

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Between:

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1.DHARANI INFRA, SHOP NO. 1357, SRI BAPUJI MARKET COMPLEX, ONGOLE, REP. BY ITS MANAGING PARTNER, SRI. LOKIREDDY SUBBA REDDY, S/0. HANUMA REDDY, AGED ABOUT 44 YEARS. PRAKASAM DISTRICT.

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...PETITIONER

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AND

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1.THE STATE OF AP, REP BY ITS PRINCIPAL SECRETARY, REVENUE (CT) DEPARTMENT VELAGAPUDI, AMARAVATHI, GUNTUR DISTRICT, ANDHRA PRADESH.

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2.THE ASSISTANT COMMISSIONER ST, KAVALI CIRCLE, SPSR NELLORE DISTRICT ANDHRA PRADESH.

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3.THE ASSISTANT COMMISSIONER ST, FORMERLY COMMERCIAL TAX OFFICER NO. 1 CIRCLE, ONGOLE, PRAKASAM DISTRICT ANDHRA PRADESH.

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...RESPONDENT(S):

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Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased topleased to issue an appropriate writ, order or direction particularly in the nature of Writ of MANDAMUS declaring the action of the Respondents more particularly after calling for the entire records relating to the impugned proceedings of the Assistant Commissioner (ST), Kavali Circle, Kavali dated

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21-01-2025 in Form GST DRC -07 for the period 15-10-2018^to30-11-2020 under section 74 of the GST Act 2017 without issue of show cause notice subsequent to 10-01- 2025 without issuing of personal hearing notice where after and without supply of copy of the report of 10-01 -2025 by holding the as illegal, arbitrary, wilful disobedience of the directions of this Honble Court dated 17-08-2023 in W.P. No. 26140/2022 and without authority of law, violative of articles 14, 19(1)(g), 21 and 300-A of^{theConstitutionofIndiaand} pass

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lA NO: 1 OF 2025

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Petition under Section 151 CPC praying that in the^{circumstancesstated} in the affidavit filed in support of the petition, the High Court may be pleased pleased to 68 days condone the delay of days in representing^the writ petition, the Petitioner would suffer severe loss and hardship.

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lA NO: 2 OF 2025

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Petition under Section 151 CPC praying that in the^{circumstancesstated} in the affidavit filed in support of the petition, the High Court may be pleased pleased to suspend the operation of the impugned order^of21-01-2025 issued by the 2nd Respondent received on 24-01-2025 pending disposal of the writ petition or else the Petitioner would suffer^seriousloss

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Counsel for the Petitioner:

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1.M VJ KKUMAR

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Counsel for the Respondent(S):

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1 .GP FOR COMMERCIAL TAX

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The Court made the following Order: (per HonUeSn justice R.RaghunandanRao)

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Heard M.V.K. Moorthy, learned Senior Counsel appearing on behalf of Sri M.V.J.K. Kumar, learned counsel for the petitioner and the Learned Assistant Government Pleader for Commercial Tax.

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The petitioner is in the business of construction services and is a registered person under the GST regime. The petitioner^{wasservedwithan} Order, dated 19.05.2022, denying one time option, to pay a reduced rate of tax on construction services, on the ground that the necessary option forms are not available or not traceable in the office of the Assistant Commissioner (ST), GST No.1 Circle, Ongole.

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Aggrieved by the said Order dated 19.05.2022, the petitioner^had approached this Court, by way of W.P.No.26140 of 2022, contending that the denial of the option of payment of tax at a reduced rate, on the ground that the option form is not available with the concerned authority, is an arbitrary action. This Court, by an Order dated 17.08.2023, had allowed the Writ Petition by setting aside the Order, dated 19.05.2022, and remanding^{thematterbackto} the appropriate authority with a direction to receive the copy of confirmation of Annexure-IV submitted by the petitioner and to examine the genuineness or otherwise of the document and to pass appropriate orders after affording an opportunity of hearing to the parties.

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The petitioner, after the disposal of the Writ Petition, had submitted the Annexure-IV and the proof of filing of^{thesaidAnnexure-IVto} the assessing authority. It appears that the assessing authority, by notice dated 20.10.2023 and 04.10.2024, had sent the said Annexure-IV to the Assistant Commissioner(ST), Ongole-I, for confirmation of the genuineness of the Annexure-IV. Thereafter, the petitioner has been^{servedanOrderdated} 21.01.2025, in which the 2'^'^ respondent had held that the report of the Assistant Commissioner (ST), Onglole-I, stated that the documents produced by the petitioner are not genuine and that Annexure-IV had not been

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submitted at all. On this basis, the claim of the petitioner for a levy of the reduced taxes was rejected and a fresh Order was again passed on 21.01.2025. 5. Aggrieved by the said Order dated 21.01.2025, the petitioner^has again approached this Court by way of the present Writ^Petition.

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The petitioner has raised various grounds of challenge^bothon merits and on violation of the principles of natural justice as well as the violation of the right of the petitioner for a personal hearing in the matter.

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Learned Assistant Government Pleader for Commercial Tax, on instructions, has fairly conceded that a proper show-cause^noticewasnot issued after the report of the Assistant Commissioner (ST), Onglole-I, had been received.

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This Court, in the Order dated 17.08.2023, had directed^{the2"'^} respondent to pass fresh orders after affording an opportunity of hearing to both parties. In such circumstances, the report of^{theAssistantCommissioner} (ST), Onglole-I, should have been served on the petitioner and the petitioner should have been given an opportunity of hearing. It appears that such an opportunity had not been given. This fact becomes clear when^{thereferences} in the impugned Order dated 21.01.2025 is perused. In the references, the 2 nd respondent states that the letter to the Assistant Commissioner (ST), OngloleI, for confirmation of genuineness was sent on 20.10.2023^{and04.10.2024.} The report of the Assistant Commissioner (ST), Onglole-I,^{issaidtohavebeen} dated 10.01.2025. However, a notice for personal hearing was given on 04.10.2022, even before the report of the Assistant Commissioner (ST), Onglole-I, had been received. In such a situation, it is obvious that there was no personal hearing given to the petitioner after receipt of the report.

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Apart from this, the provisions of the GST Act itself stipulate that a registered person is entitled to a notice and hearing whenever the authority proposes to pass an Order adverse to the interest of the registered person.

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As there has been a violation of the directions of this Court as well as the provisions of the GST Act, it would be appropriate to set aside the impugned Order dated 21.01.2025. However, it would be open to the 2 nd respondent to initiate afresh proceedings after giving appropriate notice and opportunity of hearing to the petitioner, in accordance with the provisions of Section 75 of the GST Act and to pass orders expeditiously.

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