To save time of honourable Courts and enable quick justice -Need for provisions to authorise officers to recall order when notice, order was not served and noticee / addressee was not aware of the same or was prevented by sufficient cause to make responses.

[DEVKUMAR KOTHARI]

To save time of honourable Courts and enable quick justice -

Need for provisions to authorise officers to recall order when notice, order was not  served and noticee / addressee was not aware of the same or was prevented by sufficient cause to make responses.

Response to notice from tax authorities is in interest of assessee:

Response to notice from  tax authorities is in interest of the noticee. No response can be and is most likely to be against the addressee/ noticee as it can invite exparty orders, penal action, and additional burdens and will have to be contested. Therefore, in case of a regular tax assessee, it can be safely assumed that noncompliance to notice was not without any reason or was not bona fide on part of tax assessee.

Matter can be different in case of civil suits, as a common practice of delaying dishonest parties adopt practices to avoid service of notice sent by opposite party and courts. But that does not apply to tax matters. Because in case of tax matters even penalty can be imposed for non-compliance.  

Non service of notice or not effective receipt of notice:

In some situations many times it happens that the notice issued by authority is not served or is not served effectively as to make the noticee aware of the same. This may happen due to several reasons like:

Change of address/ email address or return of post/ email for technical or other reasons reasons.

Delivery to wrong person or at wrong address,

Failure in ITES or use of ITES in handling of emails one may miss email due to several technical reasons like email marked as read, email placed in some folders which are not looked into like  suspected spam, social, reminders, marketing etc.

Misplacement of notices or forgetting the same as common in human working due to other priorities and organisational limitations etc.

Placing of notices, and orders merely on portal is not enough:

For general tax payers, regular visiting of portal of tax department is not required and is not possible also. Even in case of organised medium and large scale tax assesses it is not always possible because of several reasons related to concerned persons. For example concerned person being on leave, change in concerned person and consequent change required in email id etc.

Emails can also be missed due to such reasons.

Therefore, in case of e-proceedings, there are chances of failure to respond to notices placed on portal and / or sent on email only. In some situations SMS are also sent by tax departments but they are in nature of sweet reminders to remind assessee and are not notices. For example reminder to file Returns.

SMS are also difficult to be complied with due to reasons like flood of SMS due to OTP, confirmations, spam SMS etc. Furthermore, SMS may be deleted by the system also after some time or when the inbox of SMS have certain number of SMS or contents.

Specific provisions:

We find some specific provisions under some laws, under which concerned Court, Tribunal or authority can recall its order if the concerned party make an application and satisfy  the court/ authority  that due to sufficient or adequate reasons or reasons beyond his control the applicant could not attend hearing or make a representation etc.

Similar provisions can be made under tax laws for tax authorities:

Similar provisions can be introduced in various tax laws to authorise authorities to recall his exparty order so that tax assessee is not required to approach courts and / or higher authority for setting aside of the order and opportunity of hearing and passing of fresh order etc.

There can be guidelines in this regard to avoid misuse. Provisions can also be made to ensure that revenue will not suffer in such cases and compensatory levy by way of interest can be provided for delayed payment or collection of tax.

This will save lot of undesired and un-necessary litigation before Courts and / or other authorities.

Court proceedings:

In absence of such provision for application of recall  of order and rehearing of the matter assessee has to approach Courts. If Court is satisfied that there was violation of principal of natural justice or there has been gross injustice the Court may set aside the order and direct authority to make orders afresh.

This put lot of burden on our Courts. In fact , such requirement to approach Courts, are one of reason for mounting number of cases.

There are many cases:

On search we can find large number of cases filed before Courts for setting aside of exparty orders and passing of fresh orders etc.

Case of JAK COMMUNICATIONS

JAK COMMUNICATIONS PRIVATE LIMITED VERSUS DEPUTY COMMERCIAL TAX OFFICER, CHENNAI CENTRAL AND OTHERS - 2024 (2) TMI 292 - MADRAS HIGH COURT

In this case the tax assessee had to approach the High Court by way of Writ Petition (WP) to get set aside order of CTO. In this case notices and order were placed on portal only and were not physically served. It is not mentioned , whether emails, or SMS method was adopted to give any such notice or reminder.

As noted in the reported judgment as per submissions and representation of both sides it appears that it is agreed that:

1. The order dated 25.05.2023  was passed and  posted on  the departmental postal only.
2. The notices dated 24.12.2021, 24.03.2023 and 15.05.2023 were uploaded by the respondent / CTO in  departmental web portal in the “View Additional Notices and Order” column only.
3. The notices and order were not served physically to the petitioner,
4. Thus, the petitioner was unaware of the said notice and he could  not make representations against notices.
5. Therefore, it was contend that the said impugned order was passed in the violation of principles of natural justice since prior to the passing of the impugned order, neither opportunity for filing the reply nor the opportunity of personal hearing was provided by the respondent to the petitioner.

Argument and consent of respondent:

Learned counsel for the respondent submitted/ admitted:

1. The notices were uploaded by the respondent in the web portal,
2. The petitioner had failed to appear before the respondent for personal hearing.

c. She  fairly submitted  that if any order is passed by the Court, the same will be complied with by the respondent.

                     Per author- notes

1. It was agreed  by counsel of respondent to honour and comply with  the order of the Court, if any passed. Thus there was no serious objection raised by the counsel of CTO/ respondents. Therefore, one can expect that the CTO will not challenge the order of the Court.
2. The counsel of CTO could have made serious objections as to system of notices through portal only and that such system is sufficient and the assessee should be careful to attend such notices etc. In that case perhaps order of Court would be different.
3.  There seems no information or discussion about whether there was email served or not or whether such system of email  was in vogue or not this was not informed by the counsel of CTO. (- added by author)

Order of Court:

On consideration of admitted facts that notices and order were posted on portal only and there was no physical notice served the court took its own view and set aside the impugned order and observed and orders accordingly, which are summarised below:

 a.  the reasons provided by the petitioner for being unaware of the notice, which was uploaded in the web portal, are appears to be genuine.

b.  The Court  took the view that no order can be passed without providing sufficient opportunities to the petitioner.

c. No reply was filed by the petitioner and no opportunity of personal hearing was provided to the petitioner.

d. Hence, the impugned order is liable to be set aside.

e.  the impugned order dated 25.05.2023 was set aside and court  remitted the matter back to the respondents.

f. the petitioner was directed to file the reply to the show cause notice dated 24.03.2023 within a period of 21 days from the date of receipt of copy of the court  order.

g.   The respondent is directed to dispose of the matter after providing sufficient opportunities to the petitioner.

Authors view:

It appears that the counsel of CTO was aware of ongoing problems faced by assesses and she did not made any serious objections. In the order there is no reference of any precedence, it may be that the honourable Court was also sympathetic and took a lenient view. If this was not done tax assessee could be in great trouble.

To avoid such happening:

It is necessary that tax departments  take practical and friendly views by treating tax payer as an important person and for making tax matters easy, easy  and quick disposal methods can be provided including  provision for recalling of exparty orders.

On search with “physical notice to comply with principal of natural justice” author found 731 results on this portal. With more specific searches more results are likely. This is just indicative of scope of such litigation in tax matters. Many of these can be reduced and business can be made easy, if officers are authorised to take remedial actions and needs to approach courts are reduced.