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2025 (5) TMI 1724 - HC - GSTCancellation of the GST registration - Show cause notice uploaded solely on the GST Portal without any other mode of communication - No opportunity of personal hearing - HELD THAT - No doubt sending notice by uploading in portal is a sufficient service but the Officer who is sending the repeated reminders inspite of the fact that no response from the petitioner to the show cause notices etc. the Officer should have applied his/her mind and explored the possibility of sending notices by way of other modes prescribed in Section 169 of the GST Act which are also the valid mode of service under the Act otherwise it will not be an effective service rather it would only fulfilling the empty formalities. Merely passing an ex parte order by fulfilling the empty formalities will not serve any useful purpose and the same will only pave way for multiplicity of litigations not only wasting the time of the Officer concerned but also the precious time of the Appellate Authority/Tribunal and this Court as well. Thus when there is no response from the tax payer to the notice sent through a particular mode the Officer who is issuing notices should strictly explore the possibilities of sending notices through some other mode as prescribed in Section 169(1) of the Act preferably by way of RPAD which would ultimately achieve the object of the GST Act. Therefore this Court finds that there is a lack of opportunities being provided to serve the notices/orders etc. effectively to the petitioner. Hence this Court is inclined to set-aside the impugned order with terms. With the above observations directions this Writ Petition is disposed of. No costs.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of service of show cause notice and compliance with principles of natural justice Relevant legal framework and precedents: The Goods and Services Tax Act, 2017, under Section 169, prescribes modes of service of notices and orders including electronic means, but also contemplates alternative modes such as Registered Post with Acknowledgment Due (RPAD). The principles of natural justice require that a party be given a fair opportunity to be heard before any adverse order is passed against them. Court's interpretation and reasoning: The Court acknowledged that while uploading notices on the GST Portal is a recognized mode of service, it is insufficient if the taxpayer is unable to access the portal due to cancellation of registration. The Court emphasized that mere formal compliance by uploading notices does not satisfy the requirement of effective service if the petitioner remains unaware of the proceedings and is thereby denied opportunity to respond. Key evidence and findings: The petitioner's GST registration was cancelled on 19.12.2018, and the show cause notice along with reminder notices were uploaded on the GST Portal after cancellation. The petitioner did not receive any physical or alternative mode of communication and remained unaware of these notices until bank attachment was effected. This established that the petitioner was deprived of the opportunity to view or reply to the notices. Application of law to facts: The Court held that the impugned assessment order was passed ex parte without affording the petitioner any personal hearing, thereby violating the principles of natural justice. The Court found that the authorities failed to ensure effective service by not exploring alternative modes of communication as mandated under Section 169(1) of the GST Act. Treatment of competing arguments: The respondents argued that uploading on the GST Portal was sufficient service. However, the Court rejected this contention, reasoning that service must be effective and not merely a formality, especially when the petitioner could not access the portal due to registration cancellation. Conclusions: The Court concluded that the impugned order was liable to be set aside due to failure to provide effective notice and opportunity to be heard, constituting a breach of natural justice. Issue 2: Obligation of the authorities to explore alternative modes of service under Section 169 of the GST Act Relevant legal framework and precedents: Section 169(1) of the GST Act prescribes modes of service including electronic means and physical delivery such as RPAD. The law mandates that if service by one mode is ineffective, other prescribed modes should be resorted to ensure effective communication. Court's interpretation and reasoning: The Court emphasized that when repeated reminders through the GST Portal fail to elicit any response from the taxpayer, the officer must apply mind and explore alternative modes of service such as RPAD. This is to ensure that the objective of the GST Act is met and that notices do not remain mere formalities. Key evidence and findings: The record showed repeated reminders were issued via the GST Portal but no alternative methods were employed despite lack of response from the petitioner. Application of law to facts: The Court found that the authorities neglected their duty to ensure effective service by not employing alternative modes, resulting in ineffective notice and consequent invalidity of the assessment order. Treatment of competing arguments: The respondents did not dispute the availability of alternative modes but relied on the sufficiency of portal-based service. The Court rejected this, underscoring the necessity of exploring other modes when portal service is ineffective. Conclusions: The Court held that strict adherence to Section 169(1) is required to achieve effective service, and failure to do so renders the proceedings liable to be quashed. Issue 3: Legitimacy of bank account attachment in the absence of effective notice Relevant legal framework and precedents: Attachment of bank accounts under GST laws is a coercive measure that can only be justified after due process and effective notice to the taxpayer. Court's interpretation and reasoning: Since the impugned assessment order was passed without affording the petitioner an opportunity to be heard, the subsequent attachment of the petitioner's bank account was premature and unjustified. Key evidence and findings: The petitioner became aware of the attachment only upon information from the bank, which indicated lack of prior effective communication. Application of law to facts: The Court directed that upon deposit of 10% of the disputed tax by the petitioner, the attachment order should be lifted pending fresh consideration. Treatment of competing arguments: The respondents did not challenge the petitioner's claim of ignorance of the attachment order, and agreed to consider the petitioner's offer to deposit 10% of the tax. Conclusions: The Court found the attachment order unsustainable in the absence of effective notice and ordered its release upon compliance with specified conditions. Issue 4: Consideration of petitioner's voluntary offer to deposit 10% of disputed tax Relevant legal framework and precedents: Courts have discretion to accept partial deposits of disputed tax as a condition for granting relief or remanding matters for fresh consideration. Court's interpretation and reasoning: The Court noted the petitioner's willingness to deposit 10% of the disputed tax as a sign of bona fide intent and balanced the interests of revenue with the petitioner's right to be heard. Key evidence and findings: The petitioner voluntarily offered to deposit 10% of the disputed tax and sought lifting of bank attachment on this basis. Application of law to facts: The Court accepted the offer and incorporated it as a condition in the order setting aside the impugned assessment and remanding the matter for fresh consideration. Treatment of competing arguments: The Government Advocate agreed to the petitioner's proposal, facilitating an amicable resolution. Conclusions: The Court granted liberty to the petitioner to deposit 10% of the disputed tax within two weeks and ordered defreezing of bank accounts upon proof of payment. 3. SIGNIFICANT HOLDINGS "No doubt sending notice by uploading in portal is a sufficient service, but, the Officer who is sending the repeated reminders, inspite of the fact that no response from the petitioner to the show cause notices etc., the Officer should have applied his/her mind and explored the possibility of sending notices by way of other modes prescribed in Section 169 of the GST Act, which are also the valid mode of service under the Act, otherwise it will not be an effective service, rather, it would only fulfilling the empty formalities." "Merely passing an ex parte order by fulfilling the empty formalities will not serve any useful purpose and the same will only pave way for multiplicity of litigations, not only wasting the time of the Officer concerned, but also the precious time of the Appellate Authority/Tribunal and this Court as well." "When there is no response from the tax payer to the notice sent through a particular mode, the Officer who is issuing notices should strictly explore the possibilities of sending notices through some other mode as prescribed in Section 169(1) of the Act, preferably by way of RPAD, which would ultimately achieve the object of the GST Act." "The impugned order passed by the first respondent dated 27.04.2024 is set aside and the matter is remanded for fresh consideration after affording an opportunity of personal hearing to the petitioner." "The petitioner is granted liberty to deposit 10% of the disputed tax within a period of two weeks from the date of receipt of a copy of this order, and upon production of proof of such payment, the bank attachment shall be lifted forthwith."
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