Tax Order Invalidated: Procedural Defect Violates Natural Justice, Mandates Proper Notice and Hearing for Petitioner

HC ruled that tax order under GST Act was invalid due to lack of proper notice. The court found the petitioner was not served with reminder show cause notice and was denied opportunity to defend. Order was set aside, directing fresh proceedings with proper service and opportunity to be heard within specified timelines. Fundamental principles of natural justice were upheld by ensuring fair communication and hearing.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

- Whether the order passed by the assessing officer under Section 73 of the Goods and Services Tax Act, 2017, imposing tax liability along with interest and penalty, can be sustained when the petitioner was not served with the reminder show cause notice and was thus denied an opportunity to defend itself.

- Whether the petitioner's statutory appeal before the first appellate authority was rightly rejected on the ground of delay, when the petitioner was unaware of the order due to lack of proper communication.

- The legal effect of non-service or non-communication of notices/orders via the GST Portal and email, especially when such notices are not visible under the 'view notices and orders' tab.

- The applicability of precedents regarding the requirement of service of notice and the principle that no person should be condemned unheard in tax proceedings under the GST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the order under Section 73 of the GST Act in the absence of service of reminder show cause notice

Relevant legal framework and precedents: Section 73 of the GST Act empowers the assessing officer to determine tax not paid or short paid, or erroneously refunded or input tax credit wrongly availed or utilized, by issuing a show cause notice and passing an order after giving the person an opportunity of being heard. The principle of natural justice mandates that no person should be condemned unheard. The Court referred to binding precedents from division benches of the same High Court in Ola Fleet Technologies Pvt. Ltd., Shyam Roshan Transport, and Atul Agrwal, which emphasized that where the show cause notice or reminder is not served or not reflected on the GST Portal under the relevant tab, the affected party is deprived of the opportunity to defend itself.

Court's interpretation and reasoning: The Court recognized that the petitioner did not receive physical or electronic service of the reminder show cause notice, nor was it reflected under the 'view notices and orders' tab on the GST Portal. The petitioner only became aware of the order when it was uploaded on the dashboard. The Court held that such non-communication amounts to denial of opportunity to be heard, rendering the ex parte order unsustainable. The Court reiterated the principle that the legislature intended that a party liable for tax must be given at least one chance to put forth its defense and submit relevant documents before an adverse order is passed.

Key evidence and findings: The petitioner's uncontested submission that no reminder show cause notice was served physically or electronically and that the order was not communicated via email was accepted. The Court relied on the petitioner's assertion and the absence of any contrary material from the revenue authorities.

Application of law to facts: Applying the principle from the cited precedents and the statutory mandate under Section 73, the Court found the impugned order to be ex parte and unsustainable due to lack of proper service and opportunity to reply.

Treatment of competing arguments: The Court noted the respondent's reliance on the order passed by the assessing officer and the rejection of the appeal on the ground of delay but found these arguments insufficient to override the fundamental principle of natural justice and procedural fairness.

Conclusion: The Court held that the order dated 30.12.2023 passed by the assessing officer shall be treated as notice under Section 73 for the purpose of enabling the petitioner to file objections and place documents before the assessing officer.

Issue 2: Rejection of statutory appeal on the ground of delay due to lack of knowledge of the order

Relevant legal framework and precedents: The limitation for filing an appeal is generally counted from the date of receipt of the order. Where the order is not communicated properly or the party is unaware of the order, the limitation period does not commence. The Court relied on the same precedents which held that denial of knowledge of the order due to non-communication vitiates the rejection of appeal on the ground of delay.

Court's interpretation and reasoning: The Court accepted the petitioner's claim that the appeal was filed immediately after coming to know of the order in February 2025 and that the delay was solely on account of non-receipt of the order. The Court found that the petitioner was rendered remediless due to lack of knowledge and that the rejection of appeal on delay grounds was not justified.

Key evidence and findings: The petitioner's prompt filing of appeal after knowledge of the order and the absence of any communication of the order to the petitioner were key facts considered.

Application of law to facts: The Court applied the principle that limitation starts only upon knowledge of the order and found the rejection of appeal on delay grounds to be unjust.

Treatment of competing arguments: The Court did not find merit in the respondent's contention that the appeal was barred by limitation, given the petitioner's lack of knowledge.

Conclusion: The Court directed that the petitioner be given an opportunity to file objections and documents, and the assessing officer/competent authority shall pass a fresh order after considering the petitioner's submissions and providing hearing.

Issue 3: Effect of non-availability of notices and orders on the GST Portal and non-communication via email

Relevant legal framework and precedents: The GST Act and rules envisage electronic communication of notices/orders via the GST Portal and email. The Court relied on precedents establishing that non-availability of notices/orders on the portal and failure to communicate via email amounts to non-service, thereby violating principles of natural justice.

Court's interpretation and reasoning: The Court emphasized that the GST Portal's 'view notices and orders' tab is the primary means for communication and that non-reflection of notices thereon means the party was not properly informed. This non-communication was held to invalidate the impugned order.

Key evidence and findings: The petitioner's undisputed claim of non-availability of reminder show cause notice on the portal and non-receipt of email communication was accepted.

Application of law to facts: The Court applied the principle that proper service under the GST Act requires availability of notices on the portal and/or email communication, and absence thereof vitiates the proceedings.

Treatment of competing arguments: The Court did not accept any contrary submissions from the respondent on this aspect.

Conclusion: The Court declared that the impugned order cannot be sustained due to defective communication and directed fresh proceedings.

3. SIGNIFICANT HOLDINGS

The Court held:

"Nobody should be condemned unheard and legislature while incorporating the provision of notice/ show cause notice, intended so."

"The order passed by the assessing officer dated 30.12.2023 shall be taken to be notice within the meaning of Section 73 of the GST Act, 2017 to enable the petitioner to file his objections and place its documents before assessing officer/ competent authority for its consideration."

"The petitioner shall be submitting his reply alongwith document within a period of eight weeks from today and thereafter assessing officer/competent authority shall be giving due consideration to the objections and documents filed and opportunity of hearing as well and thus shall be taking decision afresh within a further period of four weeks."

The Court reaffirmed the core principle that proper service of notice and opportunity to be heard are fundamental requirements under the GST Act and failure thereof renders orders passed ex parte liable to be set aside. It also established that limitation for filing appeal begins only upon knowledge of the order, and lack of communication vitiates rejection of appeal on delay grounds.

Accordingly, the Court set aside the impugned order and remanded the matter for fresh consideration after proper service and hearing, thereby preserving the petitioner's right to defend itself and ensuring adherence to principles of natural justice.

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