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2025 (6) TMI 1419 - HC - GSTViolation of principles of natural justice - ex-parte order - Non-service of SCN - physical service of SCN not done - petitioner has not been heard before passing the impugned order - Lifting of bank account of the petitioner maintained in Indian Bank Anna Nagar Branch - petitioner has voluntarily come forward to deposit 25% of the disputed tax - 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 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. 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. 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 by issuing the directions imposed - the matter is remanded to the first respondent for fresh consideration. Petition disposed off by way of remand.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are: - Whether the issuance of the show cause notice solely by uploading it on the GST portal, without serving a physical or alternative mode of notice to the petitioner, satisfies the principles of natural justice and effective service under the relevant provisions of the GST Act. - Whether the impugned assessment order confirming the proposals contained in the show cause notice can be sustained when the petitioner was not afforded an opportunity of personal hearing prior to passing the order. - Whether the bank account attachment order issued consequent to the impugned order should be lifted pending reconsideration of the matter. - The appropriate procedural course to be followed by the tax authorities in cases where the taxpayer does not respond to notices issued solely through the GST portal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Service of Show Cause Notice by Uploading on GST Portal Alone Relevant legal framework and precedents: The GST Act, specifically Section 169(1), prescribes modes of service of notices, including electronic modes and physical service methods such as Registered Post with Acknowledgment Due (RPAD). The principles of natural justice require effective and proper service of notices to enable the recipient to respond adequately. Court's interpretation and reasoning: The Court acknowledged that uploading the show cause notice on the GST portal constitutes a mode of service. However, it emphasized that mere uploading, without any further effort to ensure the notice has been brought to the taxpayer's attention, may not amount to effective service. The Court reasoned that if the taxpayer does not respond to notices served solely via the portal, the tax officer must explore alternative modes of service prescribed under Section 169(1), such as RPAD, to fulfill the object of effective communication. Key evidence and findings: The petitioner contended that they were unaware of the show cause notice as no physical copy or alternative mode of communication was employed. The notice was uploaded on 30.08.2023, but no response was received, and no further attempts to serve the notice were made. Application of law to facts: The Court found that the tax authority's reliance only on portal uploading, without further efforts to ensure effective service, amounted to a deficiency in service. This was held to be inconsistent with the requirements of Section 169(1) and principles of natural justice. Treatment of competing arguments: The respondent did not dispute the petitioner's claim but fairly conceded that the petitioner was willing to deposit 25% of the disputed tax, and the Court took this into account in framing relief. Conclusion: The Court concluded that the service of the show cause notice was ineffective and did not comply with natural justice, warranting setting aside the impugned order. Issue 2: Absence of Opportunity of Personal Hearing Prior to Passing the Impugned Order Relevant legal framework and precedents: The principles of natural justice mandate that a party should be given an opportunity to be heard before an adverse order is passed against them. This is especially critical in tax proceedings where assessments and attachments have significant consequences. Court's interpretation and reasoning: The Court observed that the impugned order was passed confirming the proposals in the show cause notice without affording the petitioner an opportunity of personal hearing. The Court emphasized that passing an ex parte order based on mere formal compliance (uploading notice on portal) without ensuring the petitioner's participation defeats the purpose of the GST Act and leads to unnecessary litigation. Key evidence and findings: The petitioner only became aware of the impugned order upon receipt of the bank attachment order. No prior hearing or response opportunity was provided. Application of law to facts: The Court held that the absence of personal hearing constituted a violation of natural justice and rendered the impugned order unsustainable. Treatment of competing arguments: The respondents did not contest the lack of hearing but relied on procedural formalities. The Court rejected this approach as inadequate. Conclusion: The Court found that the impugned order must be set aside and the matter remanded for fresh consideration after affording an opportunity of personal hearing. Issue 3: Lifting of Bank Account Attachment Pending Reconsideration Relevant legal framework and precedents: Attachment of bank accounts is a coercive measure to recover disputed tax. Courts have discretion to order lifting of attachments subject to conditions, especially where procedural irregularities exist. Court's interpretation and reasoning: Given the procedural lapses in service and hearing, the Court considered it just to lift the attachment subject to the petitioner depositing 25% of the disputed tax, which the petitioner was willing to do voluntarily. Key evidence and findings: The petitioner's willingness to deposit 25% of the disputed tax was a significant factor in the Court's decision. Application of law to facts: The Court ordered the second respondent to instruct the petitioner's banker to lift the attachment upon proof of such payment. Treatment of competing arguments: The respondents consented to this condition, facilitating an equitable resolution. Conclusion: The Court directed lifting of the bank attachment upon payment of 25% of the disputed tax. Issue 4: Appropriate Procedural Directions for Fresh Consideration Relevant legal framework and precedents: The GST Act mandates adherence to procedural fairness and mandates that tax authorities consider replies and provide opportunities for hearing before passing orders. Court's interpretation and reasoning: The Court laid down a clear procedural roadmap for the tax authorities to follow upon remand:
Key evidence and findings: The Court's directions reflect a balance between procedural fairness and efficient tax administration. Application of law to facts: These directions ensure compliance with the GST Act and principles of natural justice. Treatment of competing arguments: Both parties agreed to these terms, facilitating expeditious resolution. Conclusion: The Court's directions provide a comprehensive framework to rectify procedural defects and enable fresh adjudication. 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." The Court concluded that the impugned order was passed in violation of natural justice principles and set it aside with directions for fresh consideration after effective service and opportunity of personal hearing. Core principles established include:
Final determinations on each issue are:
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