2025 (6) TMI 923 - HC - GST

Violation of principles of natural justice - ex-parte impugned order - petitioner is ready to deposit 10% of disputed tax and prayed for setting aside the impugned order and remit the matter back for fresh consideration - HELD THAT - Admittedly the impugned order was passed exparte. Though the petitioner has issued with DRC proceedings and thereafter three personal hearings through web portal he is unaware of the same. Had they been issued atleast one reminder notice through alternative mode preferably by RPAD the issue of passing of exparte order would not have been arisen. This Court in number of cases held that in the event of issuing notice in respect of no reply was received the respondent is bound to issue notice by way of any one of the alternative modes preferably by way of RPAD otherwise the entire exercise of passing the assessment order is a vexatious one. 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. Conclusion - 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. The impugned order dated 17.02.2025 passed by the respondent is set aside subject to the payment of 10% of the dispute tax by the petitioner within a period of four weeks from the date of receipt of a copy of this order - Petition allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

- Whether service of show cause notices and assessment orders exclusively through the GST common portal constitutes valid and effective service under the GST Act.

- Whether the issuance of an ex parte assessment order without effective communication to the petitioner violates principles of natural justice.

- The adequacy of procedural safeguards in issuing notices under Section 169 of the GST Act, specifically the necessity of alternative modes of service such as Registered Post Acknowledgment Due (RPAD) when the taxpayer does not respond to portal communications.

- The propriety of setting aside an ex parte order subject to the petitioner depositing a portion of the disputed tax and granting an opportunity for fresh adjudication.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and Effectiveness of Service of Notices via GST Common Portal

The legal framework governing service of notices under the GST Act is encapsulated in Section 169, which permits multiple modes of service including electronic means and registered post. The Court acknowledged that uploading notices on the GST common portal is prima facie a valid mode of service.

However, the Court emphasized that mere uploading without ensuring actual receipt or awareness by the taxpayer may not amount to effective service. The petitioner's claim of limited knowledge in operating the portal and reliance on a consultant who failed to follow up was accepted as a reasonable explanation for non-response.

The Court noted that repeated reminders were sent through the portal but no alternative mode of communication was employed. This raised concerns about the adequacy of the service and whether the petitioner was afforded a fair opportunity to respond.

Issue 2: Legality of Passing Ex Parte Assessment Order Without Effective Communication

The impugned order was passed ex parte due to the petitioner's non-response. The Court scrutinized the procedural fairness of this approach. It held that passing an ex parte order after sending notices only through the portal, without exploring other modes of service, amounts to "fulfilling empty formalities" and is vexatious.

The Court relied on precedents establishing that when a taxpayer does not respond to notices sent by one mode, the tax officer is obligated to attempt service by alternative means, preferably RPAD, to ensure the taxpayer's awareness and participation.

This principle is rooted in the broader doctrine of natural justice, requiring that a party be given a reasonable opportunity to be heard before adverse orders are passed.

Issue 3: Adequacy of Procedural Safeguards under Section 169 of the GST Act

The Court interpreted Section 169 as mandating that the tax officer must apply their mind and exhaust alternative modes of service if there is no response to the initial notice. This interpretation aims to prevent mechanical issuance of ex parte orders and to reduce multiplicity of litigation arising from defective service.

The Court underscored that reliance solely on portal-based communication, without supplementing it with registered post or other recognized modes, undermines the efficacy of the GST adjudication process and the objectives of the Act.

Issue 4: Setting Aside the Ex Parte Order and Granting Fresh Opportunity Subject to Deposit

Considering the petitioner's willingness to deposit 10% of the disputed tax and the respondent's consent to the same, the Court exercised its discretionary power to set aside the impugned order on terms.

The Court directed the petitioner to pay 10% of the disputed tax within four weeks and thereafter file a detailed reply with supporting documents within two weeks. The respondent was mandated to consider the reply, issue a clear 14-day notice affording personal hearing, and decide the matter afresh in accordance with law.

This remedy balances the interests of the revenue and the taxpayer, ensuring procedural fairness while safeguarding revenue collection.

3. SIGNIFICANT HOLDINGS

The Court held: "Had they been issued at least one reminder notice through alternative mode preferably by RPAD, the issue of passing of ex parte order would not have been arisen."

It further stated, "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."

Core principles established include:

• Service of notices under the GST Act must be effective and not merely formal; reliance solely on portal communication without alternative modes when there is no response is inadequate.
• Tax authorities must apply their mind and explore alternative modes of service such as RPAD to ensure the taxpayer's awareness before passing ex parte orders.
• Natural justice requires that a taxpayer be given a fair opportunity to participate in adjudication proceedings.
• Ex parte orders passed without effective service can be set aside on terms, including partial deposit of disputed tax and grant of fresh opportunity for hearing.

Final determinations on each issue were:

• The service of notices solely through the portal was insufficient given the petitioner's non-response and lack of awareness.
• The ex parte order was improperly passed without adequate service and opportunity to be heard.
• The impugned order was set aside subject to the petitioner depositing 10% of the disputed tax.
• The matter was remanded for fresh consideration with directions to issue notice through effective modes and provide personal hearing.