2025 (6) TMI 1567 - HC - GST

Violation of principles of natural justice - non-service of SCN - all notices/communications were uploaded by the respondent in the GST common portal - 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 to the respondent - HELD THAT - In the case on hand it is evident that the show cause notice 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. Further it was submitted by the learned counsel for the petitioner that the petitioner is willing to pay 25% of the disputed tax amount to the respondent. In such view of the matter this Court is inclined to set aside the impugned order dated 19.12.2024 passed by the respondent - The impugned order dated 19.12.2024 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

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

(a) Whether service of notices and communications solely by uploading on the GST common portal constitutes effective and valid service under the relevant provisions of the GST Act;

(b) Whether the petitioner was denied the opportunity of personal hearing before passing the impugned order, and if so, whether such denial vitiates the order;

(c) Whether the respondent authority complied with the requirement to explore alternative modes of service prescribed under Section 169 of the GST Act when there was no response from the petitioner to notices uploaded on the portal;

(d) The propriety of setting aside the impugned order and remanding the matter for fresh consideration subject to conditions, including payment of a portion of the disputed tax amount;

(e) The procedural safeguards necessary to ensure fair hearing and effective service of notices in GST proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Validity and Effectiveness of Service by Uploading Notices on GST Portal

The legal framework governing service of notices in GST proceedings is primarily found in Section 169 of the GST Act, which prescribes modes of service including electronic means, delivery by hand, registered post, or courier. The respondent had uploaded all notices and communications on the GST common portal, relying on this mode as sufficient service.

The Court acknowledged that uploading notices on the portal is a recognized mode of service under the Act. However, the petitioner contended that they were unaware of such notices as no physical or direct communication was received, and the original notices were not furnished.

The Court interpreted that while electronic service via the portal is valid, it cannot be the sole mode relied upon when the recipient does not respond or acknowledge receipt. The Court emphasized that mere uploading without ensuring effective communication may amount to "fulfilling empty formalities" rather than meaningful service. This interpretation aligns with the principle that effective notice is essential for the exercise of natural justice rights, including the right to be heard.

The Court found that the respondent did not explore alternative modes of service prescribed under Section 169(1) of the GST Act, such as sending notices by Registered Post with Acknowledgment Due (RPAD), which is a more reliable method to ensure receipt. This failure undermined the effectiveness of service.

Issue (b): Denial of Opportunity of Personal Hearing

The petitioner argued that no personal hearing was granted prior to passing the impugned order, which confirmed the proposals contained in the show cause notice. The respondent candidly admitted that no personal hearing opportunity was provided.

The Court held that passing an ex parte order without affording the petitioner a personal hearing violates principles of natural justice. The absence of personal hearing, coupled with ineffective service of notices, rendered the impugned order unsustainable.

The Court underscored that the GST regime contemplates the right of the taxpayer to be heard before adverse orders are passed, and failure to provide such opportunity vitiates the order.

Issue (c): Duty of the Officer to Explore Alternative Modes of Service

The Court elaborated on the responsibility of the tax officer when the taxpayer does not respond to notices served through one mode. It held that the officer must "apply his/her mind" and explore other modes of service prescribed under Section 169(1) of the GST Act to ensure effective communication.

Specifically, the Court recommended the use of RPAD as a preferred alternative to achieve the object of the GST Act, which includes effective compliance and adjudication. This approach prevents mere formal compliance and avoids multiplicity of litigations that waste judicial and administrative resources.

The Court found that the respondent's failure to adopt such measures amounted to a lack of effective service, thereby prejudicing the petitioner's right to fair proceedings.

Issue (d): Setting Aside the Impugned Order and Remanding for Fresh Consideration

The petitioner expressed willingness to pay 25% of the disputed tax amount as a condition for remand. The respondent also consented to remand subject to this payment.

The Court, balancing the interests of justice and expediency, set aside the impugned order dated 19.12.2024 and remanded the matter to the respondent for fresh consideration. The remand was conditional upon the petitioner paying 25% of the disputed tax amount within four weeks.

The Court directed that upon such payment, the petitioner must file their reply or objection with necessary documents within three weeks. The respondent was then mandated to consider the reply, issue a clear 14-day notice fixing the date of personal hearing, and thereafter pass appropriate orders on merits in accordance with law.

This procedural roadmap ensures adherence to principles of natural justice and effective service, thereby rectifying the procedural lapses in the original proceedings.

Issue (e): Procedural Safeguards and Fair Hearing

The Court emphasized the importance of procedural fairness in GST adjudication, particularly the necessity of personal hearing and effective service of notices. It held that ex parte orders based on ineffective service and without hearing are liable to be set aside.

The directions issued by the Court establish a framework to uphold these safeguards, including timelines for payment, filing of objections, issuance of personal hearing notices, and expeditious disposal of the matter.

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."

"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:

• Uploading notices on the GST portal, while recognized, must be supplemented by other modes of service if there is no response to ensure effective communication.
• Taxpayers must be afforded a personal hearing before passing adverse orders.
• Failure to provide effective service and hearing vitiates the impugned order.
• Remand with conditions, including partial payment of disputed tax, is an appropriate remedy to balance interests and ensure procedural fairness.

Final determinations on each issue are:

(a) Service solely by uploading on the portal without follow-up by other modes is insufficient if the taxpayer does not respond.

(b) The petitioner was denied the opportunity of personal hearing, which is mandatory before passing adverse orders.

(c) The respondent failed to explore alternative modes of service as required under Section 169(1) of the GST Act.

(d) The impugned order is set aside and remanded for fresh consideration on condition of payment of 25% of disputed tax.

(e) The respondent must provide a clear notice of personal hearing and dispose of the matter expeditiously after considering the petitioner's reply.