2023 (12) TMI 664 - HC - GST

Tax Notice Dispute: Procedural Guidance Allows Appeal Filing, Preserves Rights with Conditional Bank Account Access

The HC examined a tax dispute involving service of notices and natural justice principles. The court found factual complexities beyond summary ... Freezing of petitioner's bank account - violation of principles of natural justice - violation of statutory provisions in Section 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- There is a factual dispute with respect to service of notice as contended by the petitioner and the respondents. Admittedly, the petitioner had not informed about the change of email ID to the respondents. The petitioner is also not in a position to explain as to why the petitioner did not inform the change of email ID and why he did not check the portal although the petitioner himself contends that based on the new consultant’s advise, he made payment of shortfall for the period 2017-18. This issue would require adjudication on facts which cannot be gone into under Article 226 of the Constitution of India. Therefore, it would be in the interest of the petitioner that the petitioner is relegated to the remedy of an appeal for adjudication of all his contentions including on natural justice. Petitioner is relegated to alternate remedy of appeal - Petition disposed off. Issues involved:The issues involved in this legal judgment include violation of natural justice in passing the demand order, freezing of the petitioner's bank account, and the legality of the notice issued by the respondent under the Central Goods and Services Tax Act, 2017.Violation of Natural Justice:The petitioner contended that the demand order passed was in violation of natural justice as they did not receive any notice of hearing before the order was issued. The petitioner argued that they were unaware of any demand against them and that no proper show cause notice had been issued, leading to a violation of principles of natural justice. The petitioner sought relief from the court under Article 226 of the Constitution of India.Service of Notices:The respondents argued that notices were served on the email ID provided by the petitioner and were also uploaded on the portal, which the petitioner was expected to check. The respondents maintained that since the notices were served, the petitioner's claim of no notice being issued was unjustified. They also pointed out that an appeal remedy was available against the impugned order, suggesting that the court should not intervene and should instead direct the petitioner to pursue the appeal process.Court's Decision:The court noted a factual dispute regarding the service of notices between the petitioner and the respondents. It was observed that the petitioner had not informed about the change of email ID to the respondents, raising questions about why this information was not provided. The court concluded that the issue required adjudication on facts beyond the scope of Article 226. Consequently, the court directed the petitioner to pursue the alternate remedy of an appeal for a comprehensive adjudication of all contentions, including those related to natural justice.Order of the Court:The court ordered that the petitioner should pursue the remedy of an appeal. If the appeal is filed within four weeks, it should be adjudicated without objections on limitations. The petitioner was instructed to apply for the de-freezing of the bank account after filing the appeal and making a mandatory pre-deposit under Section 107(6) of the CGST Act. The respondents were directed to decide on the de-freezing application within two weeks of its filing. All contentions of the parties were expressly kept open, and the petition was disposed of without any costs imposed.