Tax Authority's Digital Notice Invalid; Petitioner Granted Hearing and Opportunity to Respond Under Natural Justice Principles

The HC found that the tax authority's notice via portal was insufficient. The court set aside the tax order, granted the petitioner two weeks to respond to the show cause notice, and directed the authority to provide a reasonable opportunity for hearing, including lifting the bank account attachment. The matter was remanded for reconsideration within three months.

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Issues involved: Challenge to tax demand due to lack of reasonable opportunity for contesting the order.

Summary:

Issue 1: Lack of Reasonable Opportunity for Contesting Tax Demand
The petitioner challenged an order dated 10.09.2023, claiming they were unaware of the proceedings leading to the order as notices were only uploaded on the portal and not communicated through other means. The petitioner discovered the order upon receiving communication about the attachment of their bank account. The petitioner, supported by bank statements, argued that a sum covering tax, interest, and penalty was deducted from their account, related to a discrepancy between their GSTR 3B and auto-populated GSTR 2B returns. The respondent contended that the petitioner had sufficient opportunity to contest the tax demand, with a show cause notice and reminders issued. The court noted the amount deducted from the petitioner's account matched the tax demand, ensuring revenue interest, and decided to set aside the impugned order and remand the matter for reconsideration. The petitioner was granted two weeks to respond to the show cause notice, and the respondent was directed to provide a reasonable opportunity, including a personal hearing, before issuing a fresh order within three months. The attachment on the petitioner's bank account was lifted pending the outcome of the proceedings.

Conclusion:
The High Court of Madras set aside the impugned order, remanded the matter for reconsideration, and directed the respondent to provide the petitioner with a reasonable opportunity to contest the tax demand. The petitioner was granted time to respond to the show cause notice, and the attachment on their bank account was lifted.

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