2025 (6) TMI 105 - HC - GST

GST order set aside for inadequate notice service despite online portal delivery under Section 169(d)

Tvl. AGS Mall Versus The Commercial Tax Officer, Jurisdiction, Thirupattur

The Madras HC set aside a GST order reversing the petitioner's Electronic Credit Ledger debit, finding violation of natural justice principles. The court ... Challenge to order of the respondent - reversal of suo moto debiting of the Electronic Credit Ledger of the Petitioner - non-service of notices - notices were uploaded in the GST Portal under the unusual column, i.e. 'View Additional Notice/Orders' - violation of principles of natural justice - HELD THAT:- The service effected by the respondent through on-line portal cannot be deemed to be sufficient service. It is pertinent to mention here that though Section 169 of the Act, particularly, clause (d) prescribes mode of service via. Online Portal, the very same Section also prescribes many modes of services for sending notice to the assessees, of which, valid modes of sending GST Notices are hand-delivering the notices either directly or by a messenger by a courier to the taxpayer or his authorized representative, by registered post or a speed post or a courier with an acknowledgement addressed to the last known address of the taxpayer. When the respondent-Department realizes the fact that the notice effected via, On-line portal service does not fetch them any reply/response, instead of sticking on to the similar of mode of service by sending notices/reminders incessantly, they could change mode of service and this Court suggests that notice through RPAD would be the best mode of service,in which case, the assessee cannot take advantage of the notice being unnoticed or plead ignorance, and in the case of the same being not delivered due to reasons such as 'No such addressee', 'Incorrect address', proper endorsement to such effect would be available to the respondent- Department, and in the case of acceptance by the assessee, acknowledgement of the same would be available, thereafter, there won't be any fetter on the respondent-GST Department to proceed against the assessees in the manner known to law. This Court has no hesitation to hold that the impugned order is an ex parte order as the same suffers from violation of principles of natural justice and is liable to be aside on account of the fact that the petitioner has not been heard before passing such order. Therefore, this Court is inclined to set aside the impugned order - the matter is remanded to the respondent for fresh consideration. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court in this matter are:Whether service of notices/communications uploaded on the GST Portal under the column 'View Additional Notices/Orders' instead of the usual 'View Notices/Orders' constitutes valid and sufficient service under the GST law.Whether the impugned order dated 16.03.2024, passed under Section 73 of the GST Act, is sustainable in law despite being passed ex parte without affording the petitioner an opportunity of hearing.Whether the mode of service adopted by the respondent, primarily through the online GST Portal, complies with the statutory requirements under Section 169 of the GST Act and principles of natural justice.Whether the impugned order can be sustained when the petitioner claims it was unaware of the notices due to their unusual placement on the GST Portal and hence was deprived of the opportunity to respond.What is the appropriate course of action when the disputed tax has already been recovered from the petitioner through the Electronic Credit Ledger account, but the order underlying such recovery is challenged as being passed without due process.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity and sufficiency of service of notices via the GST Portal under 'View Additional Notices/Orders'Relevant legal framework and precedents: Section 169 of the GST Act prescribes the modes of service of notices and orders. Clause (d) of Section 169 specifically recognizes service through the online GST Portal as a valid mode. However, the section also recognizes other modes including hand delivery, registered post, speed post, courier with acknowledgment, or delivery by messenger to the last known address of the taxpayer.Court's interpretation and reasoning: The Court noted that while Section 169(d) authorizes service via the online portal, it does not exclude other modes of service. The Court emphasized that the respondent-Department must ensure that the mode of service adopted is effective and results in actual communication to the taxpayer or their authorized representative. The Court observed that the notices in this case were uploaded under an unusual tab, 'View Additional Notices/Orders,' rather than the usual 'View Notices/Orders,' which led to the petitioner's consultant not noticing them.Key evidence and findings: The petitioner's consultant failed to notice the notices because they were not uploaded in the usual location on the GST Portal. There was no physical service or alternative mode of service such as registered post or courier with acknowledgment. The petitioner claimed ignorance of the notices due to this unusual placement.Application of law to facts: The Court held that mere uploading of notices under an unusual tab on the online portal cannot be deemed sufficient service, particularly when it results in the taxpayer being unaware of the notices. The Court suggested that if the online mode does not elicit a response, the Department should adopt more effective modes such as RPAD (Registered Post with Acknowledgment Due) to ensure proper service.Treatment of competing arguments: The respondent contended that the online mode is sufficient and consistent with Section 169(d), especially as most taxpayers engage GST practitioners who access the portal regularly. The Court, however, found that this argument does not hold when the notices are not placed in the usual location and the taxpayer remains unaware.Conclusion: The Court concluded that the mode of service adopted was ineffective and insufficient, violating the statutory mandate and principles of natural justice.Issue 2: Validity of the impugned order passed ex parte without hearing the petitionerRelevant legal framework and precedents: Principles of natural justice require that before an adverse order is passed, the affected party must be given an opportunity to be heard. Section 73 of the GST Act governs determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized.Court's interpretation and reasoning: The Court observed that the impugned order dated 16.03.2024 was passed summarily confirming the notice proposal under Section 73 without issuing a detailed assessment order or providing the petitioner an opportunity of hearing. The order was based on annexures uploaded on the portal but not physically served or brought to the petitioner's notice effectively.Key evidence and findings: The petitioner was deprived of the opportunity to file a reply or to be heard in person. The respondent did not issue any detailed order or communication in DRC-01A form but relied on documents uploaded online. The petitioner's claim that the order is ex parte and violates natural justice was substantiated by the absence of any hearing or effective communication.Application of law to facts: The Court held that an order passed without hearing the affected party is ex parte and violates the principles of natural justice. The absence of a detailed order or proper service further compounded the procedural infirmity.Treatment of competing arguments: The respondent did not dispute the absence of hearing but sought to justify the service mode and the order's validity. The Court found these arguments insufficient to cure the procedural defect.Conclusion: The impugned order was held to be unsustainable and liable to be set aside for violation of natural justice.Issue 3: Appropriate remedy and directions when disputed tax has already been recoveredRelevant legal framework and precedents: The Court has inherent powers to set aside orders passed in violation of natural justice and to remit the matter for fresh consideration. Recovery of disputed tax does not preclude judicial scrutiny of the order authorizing such recovery.Court's interpretation and reasoning: The respondent fairly submitted that the disputed tax has already been recovered through the Electronic Credit Ledger. The Court acknowledged this but held that since the order underlying the recovery was passed without due process, it must be set aside and the matter remanded.Key evidence and findings: The petitioner's statement regarding recovery was accepted for the purpose of remanding the matter. The Court emphasized the need to provide the petitioner an opportunity to file a reply and be heard afresh.Application of law to facts: The Court directed that the impugned order be set aside and the matter remanded to the respondent for fresh consideration after affording the petitioner an opportunity of hearing. The petitioner was directed to file a reply within three weeks, and the respondent was directed to issue a clear notice and conduct a personal hearing before passing a fresh order.Treatment of competing arguments: The respondent's submission for remand was accepted as a fair and just course of action. The Court declined to impose any condition requiring the petitioner to deposit any amount, considering the tax was already recovered.Conclusion: The Court remanded the matter for fresh adjudication in accordance with law and principles of natural justice.3. SIGNIFICANT HOLDINGSThe Court held:'The impugned order is an ex parte order as the same suffers from violation of principles of natural justice and is liable to be set aside on account of the fact that the petitioner has not been heard before passing such order.''Though Section 169 of the Act, particularly clause (d) prescribes mode of service via Online Portal, the very same Section also prescribes many modes of services for sending notice to the assessees... when the respondent-Department realizes the fact that the notice effected via Online portal service does not fetch them any reply/response... they could change mode of service and this Court suggests that notice through RPAD would be the best mode of service.''Had the notice caused by the respondent reaches the petitioner-assessee's hand, definitely, the petitioner-assesseee would have come forward to file an effective reply/objection and convinced the respondent... however, since such an opportunity was deprived to the petitioner, the petitioner is now forced to pay tax/interest/penalty.'Core principles established include:Service of notices under GST law must be effective and result in actual communication to the taxpayer; mere uploading under unusual tabs on the portal is insufficient.Principles of natural justice mandate that no order adverse to a taxpayer should be passed without affording an opportunity of hearing.Where service via online portal fails to elicit response, alternative modes such as RPAD should be adopted to ensure proper service.Orders passed ex parte without hearing are liable to be set aside and remanded for fresh consideration.Recovery of disputed tax prior to adjudication does not preclude judicial review of the order authorizing such recovery.Final determinations:The impugned order dated 16.03.2024 is set aside.The matter is remanded to the respondent for fresh consideration after proper service and hearing.The petitioner is directed to file a reply within three weeks of receipt of the order.The respondent shall issue a clear notice affording 14 days' personal hearing and decide the matter in accordance with law.