2025 (6) TMI 1247 - HC - GST

Violation of principles of natural justice - non-service of SCN - impugned order is challenged on the premise that neither the show cause notices nor the impugned order of assessment has been served by tendering to the petitioner or by registered post instead it was uploaded in the common portal - HELD THAT - Upon perusal of the materials it is evident that the impugned show cause notice was uploaded on the GST Portal Tab. According to the petitioner the petitioner was not aware of the issuance of the show cause notice issued through the GST Portal and the original of the said show cause notice was not furnished to them. In such circumstances this Court is of the view that the impugned assessment order came to be passed without affording any opportunity of personal hearing to the petitioner confirming the proposals contained in the show cause notice. 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. Conclusion - 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 imposed - The matter is remanded to the respondent for fresh consideration. Petition disposed off by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

(a) Whether service of show cause notices and assessment orders by uploading them on the GST common portal alone constitutes effective and valid service under the GST Act;

(b) Whether the petitioner was afforded adequate opportunity of personal hearing before passing the impugned assessment order;

(c) Whether the assessing authority is obligated to explore alternative modes of service, such as registered post, when there is no response from the taxpayer to notices issued through the portal;

(d) Whether the impugned order passed without effective service and opportunity of hearing is liable to be set aside;

(e) What procedural directions are appropriate to ensure compliance with principles of natural justice and statutory requirements in reassessment.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) and (c): Validity and sufficiency of service by uploading notices on GST portal versus requirement to explore alternative modes of service

The Court acknowledged that sending notices by uploading them on the GST portal is recognized as a mode of service under the GST Act and generally considered sufficient. However, the Court emphasized that mere formal compliance by uploading notices, without ensuring that the taxpayer has actually received or is aware of the notice, does not amount to effective service. The Court referred to the provisions of Section 169(1) of the GST Act, which enumerates various modes of service, including personal delivery, registered post, courier, and electronic means.

The Court reasoned that when repeated reminders sent through the portal fail to elicit any response from the taxpayer, the assessing officer is duty-bound to apply their mind and explore alternative modes of service prescribed under the statute, preferably by Registered Post Acknowledgement Due (RPAD). This approach ensures that the object of the GST Act-effective tax administration and compliance-is met, and prevents the issuance of orders based on mere formalities that do not constitute real communication.

The Court held that failure to adopt such alternative modes of service, especially when the taxpayer remains unresponsive to portal communications, renders the service ineffective and undermines the principles of natural justice.

Issue (b) and (d): Opportunity of personal hearing and consequences of passing ex parte assessment order

The petitioner contended that they were unaware of the show cause notice and did not receive any original notice by registered post or other means, resulting in an inability to participate in the adjudication proceedings. The Court found that the impugned assessment order was passed without affording any opportunity of personal hearing to the petitioner, which is a fundamental requirement under the GST procedural framework and principles of natural justice.

The Court observed that passing an ex parte order based on notices served only through the portal, without ensuring the taxpayer's awareness or participation, is not only procedurally flawed but also counterproductive. Such practice leads to multiplicity of litigation, wastes judicial and administrative resources, and defeats the purpose of fair tax administration.

Accordingly, the Court concluded that the impugned order was liable to be set aside due to the lack of effective service and denial of opportunity for hearing.

Issue (e): Appropriate procedural directions for fresh consideration

In the interest of justice and to balance the rights of the revenue and the taxpayer, the Court issued detailed directions for fresh proceedings. The petitioner was directed to deposit 25% of the disputed tax within two weeks, demonstrating their willingness to comply. Subsequently, the petitioner was to file a detailed reply with supporting documents within two weeks.

The assessing authority was then mandated to consider the petitioner's submissions and issue a clear notice affording a personal hearing with at least 14 days' notice. The authority was further directed to decide the matter strictly in accordance with law after hearing the petitioner.

This procedural roadmap was designed to ensure that the reassessment is conducted fairly, transparently, and in compliance with statutory requirements and principles of natural justice.

3. SIGNIFICANT HOLDINGS

The Court held:

"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."

Core principles established include:

• Effective service under the GST Act requires actual communication or reasonable assurance of receipt, not mere formal uploading on a portal.
• Assessing authorities must proactively explore alternative modes of service when no response is received through initial modes.
• Opportunity of personal hearing is mandatory before passing assessment orders.
• Ex parte orders based on ineffective service and denial of hearing are liable to be set aside.
• Taxpayers' willingness to comply (e.g., deposit of disputed tax) can be considered in granting opportunities for fresh adjudication.

Final determinations:

The impugned assessment order dated 29.08.2024 was set aside. The matter was remanded for fresh consideration after effective service of notices and opportunity of personal hearing. The petitioner was directed to deposit 25% of the disputed tax and file a reply. The assessing authority was directed to issue a clear notice with 14 days' hearing opportunity and decide the matter in accordance with law.