2025 (6) TMI 1342 - HC - GST

Violation of principles of natural justice - the impugned order came to be passed by the respondent without providing any opportunity of personal hearing to the petitioner - petitioner is willing to pay 25% of the disputed tax amount - HELD THAT - In the case on hand it is evident that the SCN was uploaded on the GST Portal Tab. According to the petitioner he was not aware of the issuance of the said 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. Therefore this Court finds that there is a lack of opportunities being provided to serve the notices/orders etc. effectively to the petitioner. The impugned order dated 08.08.2024 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 25% of the disputed tax amount to the respondent within a period of four weeks from the date of receipt of a copy of this order - Petition allowed by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the impugned order dated 08.08.2024 passed by the respondent without providing an opportunity of personal hearing to the petitioner is valid.

- Whether service of notices and communications solely by uploading them on the GST common portal constitutes effective and sufficient service under the GST Act.

- Whether the respondent was obligated to explore alternative modes of service of notices under Section 169(1) of the GST Act when there was no response from the petitioner to the notices uploaded on the portal.

- Whether the petitioner's willingness to pay 25% of the disputed tax amount should influence the Court's decision to set aside the impugned order and remit the matter for fresh consideration.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the impugned order passed without personal hearing

Relevant legal framework and precedents: The principles of natural justice mandate that a person affected by an adverse order should be given a reasonable opportunity of being heard before such order is passed. The GST Act, while providing modes of service, also contemplates personal hearing before finalizing assessments or orders.

Court's interpretation and reasoning: The Court observed that the impugned order was passed confirming the proposals contained in the show cause notice without affording any opportunity of personal hearing to the petitioner. The petitioner claimed ignorance of the notice uploaded on the portal and non-receipt of any physical or direct communication. The Court found that this amounted to a denial of natural justice.

Key evidence and findings: The petitioner's assertion that no original show cause notice was furnished and the respondent's admission that no personal hearing was granted prior to passing the order were critical. The Court also noted the absence of any response from the petitioner to the notices uploaded on the GST portal.

Application of law to facts: The Court held that passing an ex parte order without hearing the petitioner violated the principles of natural justice and was therefore unsustainable.

Treatment of competing arguments: While the respondent contended that uploading notices on the GST portal was sufficient service, it was conceded that no personal hearing was provided. The Court balanced this by emphasizing the importance of personal hearing in tax matters.

Conclusion: The impugned order passed without personal hearing was set aside as it violated the petitioner's right to be heard.

Issue 2: Sufficiency and effectiveness of service of notices by uploading on GST portal

Relevant legal framework and precedents: Section 169(1) of the GST Act prescribes modes of service of notices and orders, including electronic modes, but also contemplates alternative modes such as registered post with acknowledgment due (RPAD).

Court's interpretation and reasoning: The Court acknowledged that uploading notices on the GST portal is a valid mode of service. However, it emphasized that if there is no response from the taxpayer, the officer must apply mind and explore alternative modes of service prescribed under Section 169(1) to ensure effective communication.

Key evidence and findings: The Court noted that repeated reminders were sent via the portal but no response was elicited. The officer failed to consider other modes of service such as RPAD, which could have ensured actual receipt by the petitioner.

Application of law to facts: The Court held that mere uploading on the portal, without exploring alternative modes of service when there is no response, is an empty formality and does not fulfill the object of effective service under the GST Act.

Treatment of competing arguments: The respondent's reliance on portal uploading as sufficient was rejected in light of the statutory requirement to ensure effective service and the absence of response from the petitioner.

Conclusion: The Court found that the service of notices by uploading alone was insufficient and that alternative modes should have been employed to effectuate proper service.

Issue 3: Obligation to explore alternative modes of service under Section 169(1) of the GST Act

Relevant legal framework and precedents: Section 169(1) lists various modes of service including electronic modes and physical delivery by RPAD. The purpose is to ensure that notices/orders reach the concerned person effectively.

Court's interpretation and reasoning: The Court stressed that when the taxpayer does not respond to notices sent through one mode, the officer must explore other modes to achieve effective service. Failure to do so results in ineffective service and procedural infirmity.

Key evidence and findings: The absence of any attempt by the officer to send notices by RPAD or other prescribed modes despite no response from the petitioner was a significant factor.

Application of law to facts: The Court applied this principle to hold that the respondent's failure to employ alternative modes of service rendered the service ineffective.

Treatment of competing arguments: The respondent did not dispute the absence of alternative service but sought to rely on portal uploading alone. The Court rejected this approach.

Conclusion: The Court held that the respondent was obligated to explore alternative modes of service under Section 169(1) and failure to do so vitiated the proceedings.

Issue 4: Effect of petitioner's willingness to pay 25% of disputed tax amount on the Court's decision

Relevant legal framework and precedents: Courts often consider the willingness of a party to comply with part of the disputed demand as a factor in granting relief and remitting matters for fresh consideration.

Court's interpretation and reasoning: The petitioner's offer to pay 25% of the disputed tax amount was accepted as a demonstration of bona fide and willingness to cooperate. The Court used this as a condition for remitting the matter back to the respondent for fresh adjudication.

Key evidence and findings: The petitioner's expressed readiness to pay the specified amount within a stipulated time was recorded.

Application of law to facts: The Court conditioned the setting aside of the impugned order on the petitioner's payment of 25% of the disputed tax amount and directed fresh proceedings thereafter.

Treatment of competing arguments: The respondent agreed with this proposal, subject to the payment condition.

Conclusion: The Court ordered remand of the matter with conditions including payment of 25% disputed tax by the petitioner and fresh personal hearing before passing any order.

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."

Final determinations:

- The impugned order dated 08.08.2024 passed without affording personal hearing is set aside.

- Service of notices solely by uploading on the GST portal without exploring alternative modes when there is no response is insufficient and ineffective.

- The matter is remanded to the respondent for fresh consideration after the petitioner pays 25% of the disputed tax amount and is granted a personal hearing.