2025 (7) TMI 916 - HC - GST

Violation of principles of natural justice - ex-parte assessment order - no opportunity of hearing was granted as mandated u/s 75(4) of the BGST Act 2017 - HELD THAT - Time and again this Court has held that the concerned authority was required to strictly adhered to Section 75(4) of the GST Act 2017 insofar as providing personal hearing. Reading of the show cause notice dated 14.03.2023 it is evident that against the column of Date of personal hearing Time of personal hearing and Venue where personal hearing will be held it is stated-NA. Therefore petitioner cannot chose the date of personal hearing time of personal hearing and so also the venue of personal hearing. On this count the petitioner has made out a case. That apart insofar as non-compliance to Section 169 of the GST Act merely uploading the proceedings in a Portal would not suffice. In other words every day Registered Company cannot peruse the Portal as to whether respondents have uploaded certain material information or not. Therefore it is mandatory on the part of the official respondents to comply minimum two modes mentioned in Section 169 of the GST Act 2017. On this count the petitioner has made out a case so as to interfere with the impugned actions of the respondents. Accordingly they are set aside. The competent authority who has issued show cause notice is hereby directed to fix a date of personal hearing time of personal hearing and venue of personal hearing where the personal hearing would be held - Petition allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter were:

• Whether the ex-parte assessment order dated 31.08.2023 passed under Section 73(9) of the BGST Act, 2017 was valid, given that no opportunity of hearing was granted as mandated under Section 75(4) of the BGST Act, 2017;
• Whether the impugned assessment order and the subsequent demand raised in Form DRC 07 dated 31.08.2023 were passed without valid service of notice, in violation of the procedural requirements under Section 169 of the BGST Act, 2017;
• Whether the failure to serve the petitioner with show cause notices or the assessment order by a valid mode of service amounted to a violation of the principles of natural justice;
• Whether mere uploading of notices and orders on the GST portal constitutes valid service under Section 169 of the BGST Act, 2017;
• Whether the impugned assessment order was rightly characterized as an ex-parte order due to lack of opportunity of hearing and invalid service of notices;
• What reliefs are appropriate in light of any procedural irregularities found.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the ex-parte assessment order without opportunity of hearing under Section 75(4) of the BGST Act, 2017

Legal Framework and Precedents: Section 75(4) of the BGST Act, 2017 mandates that before passing an assessment order under Section 73(9), the assessing authority must provide the assessee an opportunity of personal hearing. This is a procedural safeguard ensuring compliance with the principles of natural justice. The Court has reiterated in various precedents that denial of the opportunity of hearing renders such orders liable to be quashed.

Court's Interpretation and Reasoning: The Court examined the show cause notice dated 14.03.2023 and found that the columns for date, time, and venue of personal hearing were marked as "NA" (Not Applicable). This effectively denied the petitioner the ability to select or attend a personal hearing. The Court held that such omission is contrary to the statutory requirement under Section 75(4) and violates the principles of natural justice.

Key Evidence and Findings: The absence of specified date, time, and venue for personal hearing in the show cause notice was a critical factual finding. The petitioner's inability to appear for hearing due to no such opportunity being provided was undisputed.

Application of Law to Facts: Given the statutory mandate and the factual scenario, the Court concluded that the impugned assessment order was passed without affording the petitioner the mandatory opportunity of hearing, rendering the order invalid.

Treatment of Competing Arguments: The respondents contended that the petitioner was given an option for appearance and chose not to appear. The Court rejected this argument because the notice itself did not specify any date, time, or venue, making it impossible for the petitioner to appear.

Conclusion: The impugned assessment order was passed in violation of Section 75(4) and principles of natural justice and is liable to be set aside on this ground.

Issue 2: Validity of service of notices and assessment order under Section 169 of the BGST Act, 2017

Legal Framework and Precedents: Section 169 of the BGST Act, 2017 prescribes the modes of service of notices and orders to the registered person. Valid service is essential to ensure that the assessee is aware of proceedings and can participate meaningfully. The Court has consistently held that mere uploading of notices on the GST portal does not constitute valid service unless it is accompanied by service through at least two prescribed modes.

Court's Interpretation and Reasoning: The Court noted that the respondents relied solely on uploading proceedings on the GST portal to effect service. The Court observed that expecting every registered company to daily monitor the portal for notices is unreasonable and does not satisfy the statutory requirement of valid service.

Key Evidence and Findings: The petitioner was not served with show cause notices or the impugned assessment order by any mode other than uploading on the portal. No evidence was produced to show compliance with the dual mode service requirement under Section 169.

Application of Law to Facts: The Court applied the statutory mandate strictly and held that the respondents failed to serve notices in accordance with Section 169, amounting to violation of natural justice.

Treatment of Competing Arguments: The respondents argued that uploading on the portal sufficed. The Court rejected this, emphasizing the statutory requirement of minimum two modes of service and the practical difficulties posed by relying solely on portal uploads.

Conclusion: The impugned assessment order was based on invalid service of notices and is liable to be quashed on this ground as well.

Issue 3: Whether the impugned assessment order is ex-parte due to procedural lapses

Legal Framework and Precedents: An ex-parte order is one passed without the presence or participation of the affected party, especially when the party has not been afforded an opportunity to be heard. This is impermissible unless expressly allowed by law and subject to stringent safeguards.

Court's Interpretation and Reasoning: The Court found that since the petitioner was not served valid notice and was denied personal hearing, the assessment order was effectively ex-parte. This characterization was consistent with the procedural irregularities identified.

Application of Law to Facts: The impugned order was passed without the petitioner's participation or knowledge, making it ex-parte and violative of natural justice.

Conclusion: The order was rightly characterized as ex-parte and is liable to be set aside.

Issue 4: Appropriate relief and directions

Court's Reasoning: Given the procedural violations, the Court set aside the impugned ex-parte assessment order. It directed the competent authority to issue a fresh notice specifying the date, time, and venue of personal hearing at least 15 days in advance. The authority was further directed to proceed strictly in accordance with the provisions of the BGST Act, 2017 and complete the proceedings within four months from the date of receipt of the order. The petitioner was directed to cooperate with the respondents.

3. SIGNIFICANT HOLDINGS

The Court crystallized the following principles and conclusions:

"Reading of the show cause notice dated 14.03.2023, it is evident that against the column of Date of personal hearing, Time of personal hearing and Venue where personal hearing will be held, it is stated-NA. Therefore, petitioner cannot chose the date of personal hearing, time of personal hearing and so also the venue of personal hearing. On this count, the petitioner has made out a case."

"Merely uploading the proceedings in a Portal would not suffice. In other words, every day Registered Company cannot peruse the Portal as to whether respondents have uploaded certain material information or not. Therefore, it is mandatory on the part of the official respondents to comply minimum two modes mentioned in Section 169 of the BGST Act, 2017."

"The impugned assessment order dated 31.08.2023 is an ex-parte order as the notices were never served upon the Petitioner firm in terms of Section 169 of the BGST Act, 2017 nor the Petitioner was granted an opportunity of hearing in terms of Section 75(4) of the BGST Act, 2017."

Core principles established include:

• The mandatory requirement of providing a specific date, time, and venue for personal hearing under Section 75(4) of the BGST Act, 2017;
• The necessity of valid service of notices by at least two modes prescribed under Section 169 of the BGST Act, 2017, with mere uploading on the GST portal being