2025 (5) TMI 2162 - HC - GST

Seeking to call for the impugned assessment order - input tax credit has been availed from non-existent dealer - petitioner is ready and willing to deposit 25% of the disputed tax - service of notice - impugned assessment order passed without affording any opportunity of personal hearing to the petitioner - violation of principles of natural justice - HELD THAT - 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 him. In such circumstances this Court is of the view that the impugned assessment order passed without affording any opportunity of personal hearing to the petitioner confirming the proposals contained in the show cause notices is illegal and unsustainable. Assuming that sending notices by uploading in the portal is sufficient service when the Officer who was sending the repeated reminders received no response from the petitioner he ought to have applied his/her mind and explored diligently the possibility of sending notices by other modes prescribed in Section 169 of the GST Act. Mere uploading notice repeatedly without ensuring their receipt by the petitioner cannot be considered as effective service. Such mechanical compliance does not serve any useful purpose and the same will only lead to multiplicity of litigations wasting not only the time of the Officer concerned but also the precious time of the Appellate Authority / Tribunal and this Court as well. Thus when there was no response from the tax payer to the notice uploaded in the portal the Officer should have sent the notice through RPAD which would have serve the purpose. There was a failure of effective opportunity to the petitioner to reply to the show cause notice - the impugned order set aside - the matter is remanded to the first respondent for fresh consideration - petition disposed off by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the impugned assessment order dated 30.12.2024, confirming tax demand without affording the petitioner an opportunity of personal hearing, is legal and sustainable.

- Whether service of the show cause notice by merely uploading it on the GST Portal constitutes effective and valid service under the GST Act.

- Whether the failure to provide the petitioner with the original or a copy of the show cause notice and to ensure actual receipt violates principles of natural justice.

- Whether the petitioner is entitled to a direction for de-freezing of the bank account, subject to deposit of a portion of the disputed tax.

- The appropriate course of action regarding the impugned order and the assessment proceedings in light of the above issues.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality and sustainability of the impugned assessment order passed without personal hearing

The relevant legal framework includes the principles of natural justice and procedural safeguards under the GST Act, which mandate that before confirming any tax demand, the taxpayer must be given an opportunity to be heard. The Court emphasized that the impugned order was passed without issuing a personal hearing opportunity, which is a fundamental procedural lapse.

The Court noted that the petitioner was not served with a physical or direct notice but only through uploading on the GST Portal, which the petitioner was unaware of, resulting in no reply being filed. This absence of personal hearing or even a proper notice was held to render the assessment order illegal and unsustainable.

The Court reasoned that confirming tax demand without affording the taxpayer a chance to respond violates the principles of natural justice and is therefore liable to be set aside.

Issue 2: Validity of service of show cause notice by uploading on the GST Portal

Section 169 of the GST Act prescribes modes of service of notices. The Court examined whether mere uploading of the show cause notice on the GST Portal suffices as effective service.

The Court found that mechanical compliance by uploading alone, without ensuring actual receipt or response, does not amount to valid service. The Court stated that when repeated reminders on the portal failed to elicit any response, the officer should have exercised due diligence by sending the notice through alternative modes such as Registered Post with Acknowledgment Due (RPAD).

This approach prevents multiplicity of litigation and wastage of judicial and administrative resources. The Court held that mere uploading without ensuring notice receipt is insufficient and ineffective service.

Issue 3: Failure to provide original or copy of show cause notice and its impact

The petitioner contended that the original show cause notice was never furnished, and he was unaware of its issuance. The Court accepted this contention as a significant procedural lapse.

The failure to provide the original or a copy of the notice deprived the petitioner of the opportunity to properly respond, hence violating the principles of natural justice. The Court held that such failure invalidates the assessment order.

Issue 4: Direction for de-freezing of bank account subject to deposit of disputed tax

The petitioner sought de-freezing of the bank account frozen pursuant to the impugned order. The petitioner offered to deposit 25% of the disputed tax voluntarily as a condition for lifting the attachment.

The Government Advocate did not oppose this proposal. The Court accepted this as a reasonable condition and directed the petitioner to deposit 25% of the disputed tax within two weeks, upon which the bank account would be unfrozen.

Issue 5: Appropriate remedy and directions for fresh assessment proceedings

Given the procedural lapses, the Court set aside the impugned order and remanded the matter to the assessing authority for fresh consideration.

The Court directed the petitioner to deposit 25% of the disputed tax within two weeks and thereafter file a reply with supporting documents within another two weeks.

Subsequently, the assessing authority was directed to issue a clear 14-day notice affording an opportunity of personal hearing and decide the matter in accordance with law.

This ensures compliance with natural justice and statutory requirements, allowing a fair adjudication on merits.

3. SIGNIFICANT HOLDINGS

- "The impugned assessment order passed without affording any opportunity of personal hearing to the petitioner, confirming the proposals contained in the show cause notices is illegal and unsustainable."

- "Mere uploading notice repeatedly without ensuring their receipt by the petitioner cannot be considered as effective service. Such mechanical compliance does not serve any useful purpose and the same will only lead to multiplicity of litigations."

- "When there was no response from the taxpayer to the notice uploaded in the portal, the Officer should have sent the notice through RPAD, which would have served the purpose."

- The Court established the core principle that effective service of notice under the GST Act requires actual communication and not mere mechanical uploading on the portal.

- The Court held that failure to provide a personal hearing opportunity and proper service of notice violates natural justice and renders the assessment order liable to be quashed.

- The Court directed deposit of 25% of disputed tax as a condition precedent for lifting bank attachment and continuation of assessment proceedings.

- Final determination: The impugned order was set aside, and the matter remanded for fresh assessment after proper service and hearing, with directions to unfreeze the bank account upon deposit of 25% of the disputed tax.