2025 (7) TMI 202 - HC - GST

Maintainability of petition - availability of efficacious remedy of filing an appeal u/s 107 of the GST act before the appellate authority - petitioner was not given any opportunity before the assessing authority during the assessment proceedings - violation of the principle of natural justice - HELD THAT - A perusal of the provisions of Section 169 indicates that five modes of service have been provided and further that every decision order summons notice or any communication shall be deemed to have been served on the date on which it is tendered or published or a copy thereof is affixed in the manner provided in sub section (1). Therefore service can be effected at the discretion of the assessing authority by giving or tendering the notice directly or by a messenger including a courier or by registered post or by speed post or courier or by sending e- mail and or by making it available on the common portal or by publication in a news paper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided carried on business or personally worked for gain. The assessing authority in the impugned order has recorded that considering the discrepancy in the return filed by the petitioner are notice under section 61 of the GST act was sent on 04/10/2024 requiring the petitioner to remove the discrepancy pointed out in the said notice by 19/10/2024 - The petitioner did not either deposit the amount as directed by the assessing authority nor did he reply to the notice and accordingly in the aforesaid circumstances the matter was heard ex - parte and decided by the impugned order dated 19/02/2025 which has been assailed in the present writ petition. The petitioner was duly communicated by the tax department as per the modes prescribed under Section 169 and therefore it cannot be said that there was any violation of principles of natural justice. While interpreting the provision of section 169 we will also have to consider Section 13 of the Information Technology Act 2000. According to Section 13 (2) electronic record deemed to be received when it enters the designated computer recourse. Similarly as per section 13(3) unless it is otherwise agreed between the parties and electronic record is deemed to be dispatched at the place of the originator has his place of business is deemed to be received at the place of the addressee has his place of business - In the present case it cannot be lost sight of the fact that at the time of registration the petitioner has disclosed his e-mail address and the mobile over for the purpose of communication and there is therefore an agreement for exchange of communication through electronic mode. In case the assessee has given a wrong email address or an email address which is not accessible by him may or may not be a valid defence which may be determined on the facts of each individual case but one thing is clear that the respondent cannot be held be responsible for not giving adequate opportunity of hearing to the petitioner. The service of notice was made as per the provisions of Section 169 (c) of the GST Act and therefore there was no breach of the fundamental rights of the petitioner with regard to service prior during and after the assessment proceedings. In the aforesaid circumstances this court of the considered that the petitioner has an efficacious remedy by way of an appeal and therefore the aspect of service can also be duly looked into after considering the facts and material produced by the petitioner and therefore for the said reason we do not proceed to determine the question as to whether as per sub clause 2 of section 169 once the service has been effected as per sub clause (c) (d) of section 169 it shall be deemed to have been served on the date it is tendered. There are no merit in the claim of the petitioner that there is breach of fundamental rights that has occurred by not giving opportunity to the petitioner during the assessment proceedings and the impugned order has been passed without giving opportunity of hearing - the preliminary objection raised by learned counsel for the respondents that the petitioner has equally efficacious statutory remedy under Section 107 of GST Act before the First Appellate Authority is agreed and accordingly he is relegate to the same. The writ petition is not maintainable and the petitioner has equally efficacious remedy and accordingly he is relegated to the same. The petition is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the assessment order dated 19.2.2025 passed under Section 73 of the GST Act and the consequential order freezing the petitioner's bank account are liable to be set aside on grounds of non-service of notice and violation of principles of natural justice.

- Whether the petitioner was duly served with notices during the assessment proceedings as per the modes prescribed under Section 169 of the GST Act.

- Whether the petitioner was denied an opportunity of hearing during the assessment proceedings, thereby violating the principles of natural justice.

- Whether the writ petition filed under Article 226 of the Constitution is maintainable in view of the availability of an efficacious alternative remedy by way of appeal under Section 107 of the GST Act.

- The interpretation and applicability of Section 169 of the GST Act regarding modes of service of notice, and the relevance of Section 13 of the Information Technology Act, 2000 on electronic communication and deemed service.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of service of notice under Section 169 of the GST Act

Relevant legal framework and precedents: Section 169 of the GST Act prescribes multiple modes of service of notices, including direct tender, registered post, speed post, courier, email, making available on the common portal, publication in local newspapers, or affixing at a conspicuous place. Sub-section (2) provides that service shall be deemed complete on the date of tender or publication or affixation. The Information Technology Act, 2000, Section 13, governs electronic records, deeming receipt when the electronic record enters the designated computer resource of the addressee.

Court's interpretation and reasoning: The Court noted that service of notice through the e-mail address provided at the time of registration is a valid mode under Section 169(1)(c). The petitioner had provided an e-mail and mobile number of his then Manager at registration, which was used for communication. The petitioner's failure to update changed contact details does not render the service invalid. The Court emphasized that the GST Act's provision for multiple modes of service allows the assessing authority discretion in choosing the mode. The Court also relied on Section 13 of the IT Act to establish that electronic communication is deemed received when it enters the designated system, reinforcing the validity of service by e-mail.

Key evidence and findings: The impugned order records the registered mobile number and e-mail address used for communication. Notices were issued on multiple dates requiring the petitioner's response, but no reply was received. The petitioner did not update the contact information after the Manager left, resulting in non-receipt of notices.

Application of law to facts: The petitioner was served through e-mail as per Section 169(1)(c). The absence of updated contact details by the petitioner does not invalidate the service. Therefore, service was effected in accordance with the statutory provisions.

Treatment of competing arguments: The petitioner argued that service through registered post was also necessary, relying on Madras High Court judgments. The Court rejected this, holding that the assessing authority's mode of service by e-mail was valid and sufficient under Section 169. The Court also rejected the petitioner's claim of non-receipt based on changed contact details, emphasizing the statutory provisions and the petitioner's duty to update information.

Conclusion: Service of notice was validly effected under Section 169 of the GST Act and the principles of natural justice were not violated on this ground.

Issue 2: Violation of principles of natural justice due to non-opportunity of hearing

Relevant legal framework and precedents: Principles of natural justice require that a person affected by a decision must be given an opportunity to be heard. The Supreme Court has held that violation of natural justice can justify writ relief even when an alternative remedy exists.

Court's interpretation and reasoning: The Court observed that notices were issued requiring the petitioner to respond and rectify discrepancies. The petitioner failed to reply or appear. The assessing authority proceeded ex parte only after giving multiple opportunities. The Court found no denial of opportunity to be heard as notices were served as per law. The Court referred to the Supreme Court's ruling that mere non-response by the assessee does not amount to violation of natural justice when proper notice is served.

Key evidence and findings: Notices under Sections 61 and 73 of the GST Act were issued on various dates with deadlines for response. No reply was received from the petitioner. The ex parte assessment order was passed only after these notices and non-compliance.

Application of law to facts: Since the petitioner was duly served and failed to respond, the principles of natural justice were not breached. The assessing authority acted within its jurisdiction and procedure.

Treatment of competing arguments: The petitioner claimed ignorance of proceedings due to inaccessible e-mail and mobile number. The Court held that the petitioner's failure to update contact details cannot be used to claim denial of hearing. The Court rejected the argument that service only by e-mail was insufficient.

Conclusion: No violation of natural justice occurred as the petitioner was given adequate opportunity to respond, which was not availed.

Issue 3: Maintainability of writ petition in presence of alternative remedy under Section 107 of the GST Act

Relevant legal framework and precedents: The Supreme Court has consistently held that the existence of an efficacious alternative remedy is a bar to maintainability of writ petitions under Article 226 except in exceptional circumstances such as breach of fundamental rights, violation of natural justice, excess of jurisdiction, or challenge to vires of the statute. The Court relied on precedents including the ruling in Assistant Commissioner of State Tax Vs. Commercial Steel Limited and Commissioner of Income Tax Vs. Chhabil Dass Agarwal.

Court's interpretation and reasoning: The Court found no exceptional circumstances warranting interference by writ jurisdiction. The petitioner had a statutory remedy of appeal under Section 107 of the GST Act, which was not availed. The Court emphasized that the appellate authority is the appropriate forum to examine issues including service of notice and merits of assessment.

Key evidence and findings: The petitioner did not file an appeal within the prescribed time due to non-receipt of assessment order. The writ petition was filed challenging the assessment and freezing of bank account.

Application of law to facts: Since the petitioner had an efficacious remedy of appeal, the writ petition was not maintainable. The Court relegated the petitioner to pursue the statutory remedy.

Treatment of competing arguments: The petitioner argued that limitation expired due to non-communication of assessment order. The Court held that this does not justify bypassing the statutory remedy, especially when service was validly effected.

Conclusion: The writ petition is not maintainable and the petitioner must pursue the remedy of appeal under Section 107 of the GST Act.

3. SIGNIFICANT HOLDINGS

- "A perusal of the provisions of Section 169 indicates that five modes of service have been provided... service can be effected at the discretion of the assessing authority by giving or tendering the notice directly or by a messenger including a courier or by registered post or by speed post or courier or by sending e-mail and or by making it available on the common portal or by publication in a newspaper circulating in the locality..."

- "In the present case, the petitioner has been served through e-mail address provided at the time of registration... service of notice was made as per the provisions of Section 169 (c) of the GST Act and therefore, there was no breach of the fundamental rights of the petitioner with regard to service prior, during and after the assessment proceedings."

- "The respondent had a statutory remedy under Section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226... The existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226... In the present case, none of the above exceptions was established... Accordingly, we agree with the preliminary objection raised by learned counsel for the respondents that the petitioner has equally efficacious statutory remedy under Section 107 of GST Act before the First Appellate Authority and accordingly he is relegated to the same."

- "We do not find any merit in the claim of the petitioner that there is breach of fundamental rights that has occurred by not giving opportunity to the petitioner during the assessment proceedings and the impugned order has been passed without giving opportunity of hearing."

- "When a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."