2024 (2) TMI 357 - HC - GST

GST recovery order set aside due to natural justice violation despite electronic notice delivery

Sakthi Steel Trading Rep. by its Proprietor M.S. Bakkir Mydeen Versus The Assistant Commissioner (ST), Vandavasi Assessment Circle, Vandavasi.

The Madras HC set aside a GST recovery order for input tax credit, interest and penalty due to violation of natural justice principles. Although the ... Violation of principles of natural justice - although the notice that preceded the impugned order was sent by the respondent on the common portal was received by the petitioner, the petitioner was unaware of the same - Recovery of input tax credit alongwith interest and penalty - HELD THAT:- Section 169 of the respective GST enactments is a progressive provision intended to integrate technology with the assessment proceedings under the provisions of the respective GST Enactments. Section 169 of the respective GST Enactment is a step to modernize the tax administration in the country by taking advantage of available technology. At the same time, the Court cannot loose sight of the fact that although there is advancement in the technology and it is omnipresent everywhere and Section 169(1)(c) of the respective GST Enactments has statutorily recognized communication through e-mail, all men of commerce from the business community particularly small traders, small service provider and small manufacturers may not be ready to receive and respond. They may be technologically challenged which may impair them to respond autonomously to emails sent to them in the dash board of GST Web portal on their computer screen or Tab or smart phones. As a matter of prudence, it is advisable for the department to serve notice on such assessees through other mode of communications prescribed when they fail to respond to the summons, orders, notices and other communications etc., sent to them through email under Section 169 (1) (c) of the respective GST Enactments - there has to be some amount of flexibility. Rigidity in the administration of tax in such matters may not serve the purpose and can be counter productive. There has to be a proper communication as otherwise exparte decisions are susceptible to be successfully challenged and declared as arbitrary for violation of principles of natural justice. The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits in accordance with law preferably within a period of 45 days from date of receipt of this order - Petition allowed. Issues:The writ petition challenges an order passed by the State Tax Officer for the Assessment Year 2018-2019, demanding payment of disputed Input Tax Credit (ITC) and imposing penalties under the Central Goods and Services Tax Act, 2017 & Tamil Nadu Goods and Services Tax Act, 2017.Details of the Judgment:Issue 1: Service of NoticeThe petitioner claimed unawareness of the notice preceding the impugned order, arguing that service on the petitioner's brother's wife was insufficient, citing a previous decision. The respondent contended that the decision under the TNGST Rules, 1959 cannot be applied to the current GST Acts due to technological advancements.Issue 2: Applicability of Previous DecisionsThe respondent highlighted several decisions of the Court regarding Section 169 of the GST Acts and Rule 52 of the TNGST Rules, 1959, emphasizing the need to consider the specific provisions of the respective statutes.Issue 3: Interpretation of Statutory ProvisionsThe Court compared Rule 52 of the TNGST Rules, 1959 with Section 169 of the GST Acts, noting that while they are similar, they are not exactly the same. The Court emphasized the progressive nature of Section 169, which allows for communication through email and other modern methods.Conclusion:The Court set aside the impugned order, directing the respondent to pass a fresh order within 45 days, emphasizing the need for flexibility in communication methods to ensure principles of natural justice. The petitioner was instructed to reply to notices within 30 days, with a warning that failure to do so would result in the order being vacated. The writ petition was allowed with observations and no costs were imposed.