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2025 (6) TMI 1780 - HC - GSTViolation of principles of natural justice - Non-service of SCN - petitioner have not received any physical copy of the show cause notice and also personal hearing notice - Challenge to assessment order passed by the respondent relating to the Financial Year 2019-2020 - HELD THAT - It is evident that the impugned show cause notice was uploaded on the GST Portal in View Additional Notices and Orders 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. 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. As submitted by the learned counsel for the petitioner the said issue was already dealt with by this Court in SRI GANAPATHI PANDI INDUSTRIES 2024 (10) TMI 1631 - MADRAS HIGH COURT etc whereby this Court vide common order dated 17.10.2024 had quashed the impugned order passed by the Department. In such view of the matter this Court is inclined to quash the impugned order dated 16.08.2024 as regards the aforesaid issue pertaining to Section 16(4) of GST Act. As far as other issues are concerned this Court is inclined to set aside the impugned order dated 16.08.2024 passed by the respondent since lack of opportunities being provided to the petitioner. he impugned order dated 16.08.2024 is quashed only to the extent of issue relates to the claim made by the petitioner for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act 2017 - As far as other issues are concerned the impugned order dated 16.08.2024 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner deposits 25% of the disputed tax amount in respect of the impugned assessment period as agreed by the petitioner within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Service of Show Cause Notice and Opportunity of Personal Hearing Relevant Legal Framework and Precedents: The GST Act, 2017, particularly Section 169, prescribes modes of service of notices and orders. The principle of natural justice mandates that a party must be given adequate notice and opportunity to be heard before an adverse order is passed. The Court has recognized that mere formal compliance without effective communication defeats the object of such statutory provisions. Court's Interpretation and Reasoning: The Court observed that the show cause notice dated 22.05.2024 and subsequent reminders were uploaded only on the GST Portal under the "View Additional Notices and Orders" tab. The petitioner contended that they were unaware of these notices and did not receive any physical copy. The Court noted that although uploading on the portal is a recognized mode of service, it may not be effective if the recipient does not access the portal. The Court emphasized that when repeated reminders elicit no response, the tax officer must apply their mind and explore alternative modes of service prescribed under Section 169(1) of the GST Act, such as Registered Post with Acknowledgment Due (RPAD), to ensure effective communication. Merely fulfilling the formality of uploading notices without ensuring actual receipt is inadequate and contrary to the principles of natural justice. Key Evidence and Findings: The absence of any physical or alternative mode of communication and the petitioner's unawareness of the notices were key factual findings. The lack of personal hearing opportunity before passing the impugned order confirmed procedural infirmity. Application of Law to Facts: The Court applied the statutory provisions and principles of natural justice to conclude that the impugned assessment order was passed without affording the petitioner a proper opportunity of personal hearing, rendering the order liable to be set aside. Treatment of Competing Arguments: The respondent contended that uploading on the GST Portal sufficed as valid service. However, the Court rejected this as an absolute mode when the petitioner was unaware of the notices and no alternative communication was attempted. Conclusion: The impugned order was passed in violation of natural justice principles due to ineffective service of notices and denial of personal hearing opportunity. Issue 2: Limitation Bar on Claim for Input Tax Credit under Section 16(4) of CGST Act, 2017 Relevant Legal Framework and Precedents: Section 16(4) of the CGST Act, 2017, bars the claim of Input Tax Credit after the prescribed time limit. The Court referred to its earlier common order dated 17.10.2024 in related writ petitions, where similar claims were held barred by limitation and the impugned orders quashed accordingly. Court's Interpretation and Reasoning: The Court accepted the petitioner's submission that the claim for ITC was barred by limitation under Section 16(4). It relied on the precedent of the common order which had already quashed similar departmental orders on this ground. Key Evidence and Findings: The petitioner's claim was time-barred, and this was not disputed. The Court found no merit in the department's demand on this issue. Application of Law to Facts: The Court applied the limitation provision strictly and quashed the impugned order insofar as it related to the ITC claim barred by limitation. Treatment of Competing Arguments: No significant contest was noted regarding this issue, as the petitioner's position was supported by prior judicial pronouncements. Conclusion: The impugned order was quashed to the extent it related to the time-barred ITC claim under Section 16(4). Issue 3: Remand for Fresh Consideration Subject to Deposit of 25% of Disputed Tax Demand Relevant Legal Framework and Precedents: The GST Act empowers reassessment and reconsideration of tax demands subject to procedural safeguards. Courts have discretion to remand matters for fresh consideration, especially where procedural defects are found, conditioned on compliance by the taxpayer. Court's Interpretation and Reasoning: The petitioner expressed willingness to deposit 25% of the disputed tax demand and sought opportunity to file reply and be heard. The respondent agreed to this conditional approach. The Court found this to be a fit case for remand to allow fresh adjudication on merits after proper opportunity. Key Evidence and Findings: The petitioner's voluntary offer to deposit a portion of the disputed tax and readiness to comply with procedural requirements was a material consideration. Application of Law to Facts: The Court set aside the impugned order on other issues (besides the ITC claim) and remanded the matter to the respondent for fresh consideration, conditional upon deposit of 25% of the disputed tax within four weeks. The petitioner was directed to file reply/objections within two weeks thereafter, and the respondent was mandated to provide a clear 14-day notice for personal hearing before passing fresh orders. Treatment of Competing Arguments: The respondent's consent to the conditional remand and the petitioner's readiness to comply facilitated the Court's order for fresh consideration. Conclusion: The matter was remanded for fresh adjudication after compliance with conditions ensuring procedural fairness and substantive hearing. 3. SIGNIFICANT HOLDINGS The Court made the following crucial legal determinations and principles: "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 impugned order dated 16.08.2024 is quashed only to the extent of issue relates to the claim made by the petitioner for ITC, which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017." Core principles established include:
Final determinations were:
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