Revenue Department Violated Natural Justice by Failing to Follow CGST Act Rule

The High Court found that the revenue department violated the principle of natural justice by not communicating a show-cause notice/order in accordance with Rule 142 of the CGST Act. The Court ruled that the notice/order should have been uploaded on the revenue website as mandated by law, rather than communicated solely via email. Consequently, the Court invalidated the demand dated 18.09.2020 and directed the revenue department to properly communicate the show-cause notice to the petitioner following the prescribed procedure under Rule 142 for further proceedings.

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Issues:
Violation of principle of natural justice regarding communication of show-cause notice/order under Rule 142 of CGST Act.

Analysis:
The petitioner filed a petition invoking the writ and supervisory jurisdiction of the High Court under Articles 226 and 227 of the Constitution. The petitioner sought various reliefs, including quashing the impugned order in Form GST DRC-07 dated 18.09.2020 and related orders under section 74 dated 10.06.2020, as well as directing compliance with the provisions of the GST Act. The petitioner's grievance was that the foundational show-cause notice/order dated 10.06.2020 was not communicated to them, despite raising a tax demand based on this notice for the financial year 2019-2020 and tax period April 2019 to July 2019.

The Court requisitioned a reply from the State regarding the alleged violation of the principle of natural justice under Rule 142 of the CGST Act. The State responded, stating that the show-cause notice/order dated 10.06.2020 was communicated to the petitioner via email, but the petitioner did not respond to it. The petitioner argued that Rule 142(1) of the CGST Act mandates the revenue department to communicate such notices/orders by uploading them on the revenue website to ensure the aggrieved party has access to the reasons behind the demand and can seek remedies before higher forums.

Upon examining Rule 142 of the CGST Act, the Court noted that the prescribed mode for communicating show-cause notices/orders is by uploading them on the revenue website. The State admitted that the notice/order in question was not uploaded on the website, confirming that it was communicated via email. The Court emphasized the principle that when a specific procedure is prescribed by law, all other modes are excluded, especially when statutorily mandated. Consequently, the Court found that the statutory procedure for communication under Rule 142(1) was not followed by the revenue department, leading to the impugned demand being struck down.

As a result of the above analysis, the Court allowed the petition, invalidating the demand dated 18.09.2020, and granted liberty to the revenue department to communicate the show-cause notice to the petitioner following the prescribed procedure under Rule 142 of the CGST Act for further proceedings in accordance with the law.

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