2025 (7) TMI 1703 - HC - GST

Ex-parte assessment order invalid for no hearing under Section 75(4) of BGST Act, 2017; order set aside

The HC held that the ex-parte assessment order and subsequent demand under Form DRC 07 were passed without granting the petitioner an opportunity of ... Violation of principles of natural justice - non-service of notices - ex-parte assessment order and subsequent demand raised in Form DRC 07 dated 28.08.2024, passed without granting any opportunity of hearing as contemplated u/s 75(4) of the BGST Act, 2017 - HELD THAT:- This Court finds that so far as mode of service of notice is concerned, there is no denial of the fact that notice and order were uploaded under the heading ‘Additional Notices and Orders’. On perusal of the counter affidavit, it appears that so far as the uploading of summary of assessment orders in the form of DRC 07 is concerned and the notices pertaining to return module comprising GST DRC 01B and GST DRC-01C are concerned, those are required to be uploaded under the heading ‘Notices and Orders’. Section 75(4) of the CGST/BGST Act clearly provides that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty or where any adverse decision is contemplated against such persons. It is crystal clear from sub-Section (4) of Section 75 that after receipt of the show cause from the Assessee, stage of hearing shall come only after the authority contemplates passing of any adverse decision against such person - Admittedly, in the present case, when Annexure ‘P/3’ was issued no date for personal hearing was fixed and according to this Court, that was not occasion to fix the date of personal hearing because the authorities were still looking for response only. Thus, Annexure ‘P/3’ cannot be construed as an opportunity of personal hearing. No personal hearing has been given to the petitioner as required by the Statute - the impugned orders set aside on account of non-observance of statutory procedures - the impugned order is set aside - application allowed. ISSUES: Whether an ex parte assessment order passed under Section 73(9) of the BGST Act, 2017 without granting an opportunity of hearing as contemplated under Section 75(4) violates the principles of natural justice.Whether the mode of service of notice by uploading documents under the heading 'Additional Notices and Orders' on the GST Portal satisfies the requirements of valid service under Section 169 of the BGST Act, 2017.Whether mere uploading of notices on the GST Portal without any other mode of communication constitutes valid service of notice under Section 169 of the BGST Act, 2017.Whether the absence of a fixed date, time, and venue for personal hearing in the show cause notice complies with the statutory requirement of opportunity of hearing under Section 75(4) of the BGST Act, 2017.Whether the impugned ex parte assessment order and consequential recovery proceedings are liable to be quashed for non-compliance with statutory procedural safeguards. RULINGS / HOLDINGS: The ex parte assessment order dated 28.08.2024 passed under Section 73(9) without granting an opportunity of hearing as contemplated under Section 75(4) is a violation of the principle of natural justice and is liable to be quashed.The service of notice by uploading documents under the heading 'Additional Notices and Orders' on the GST Portal does not constitute valid service as required under Section 169 of the BGST Act, 2017; notices must be uploaded under the heading 'Notices and Orders' to be considered valid.Mere uploading of notices on the GST Portal, without compliance with at least two modes of service prescribed under Section 169, is insufficient to constitute valid service, as taxpayers cannot be expected to monitor the portal daily for such communications.The absence of a fixed date, time, and venue for personal hearing in the show cause notice (Annexure 'P/3') means no valid opportunity of hearing was provided under Section 75(4), rendering the assessment order ex parte and invalid.The impugned ex parte assessment order and consequential recovery proceedings are set aside for non-observance of statutory procedures, with liberty granted to file a response and for the authority to provide a proper opportunity of hearing before passing any adverse order. RATIONALE: The Court applied the statutory framework under the Bihar Goods and Services Tax Act, 2017, specifically Sections 73(9), 75(4), and 169, which regulate assessment proceedings, opportunity of hearing, and mode of service of notices respectively.The Court relied on precedents from the same High Court and other High Courts emphasizing that valid service of notice requires compliance with prescribed modes and that mere uploading under incorrect headings on the GST Portal is insufficient to constitute valid service.The Court recognized the principle that the purpose of service of notice is to make the assessee aware of proceedings and that taxpayers cannot be expected to check the portal daily, hence mandating compliance with multiple modes of service.The Court interpreted Section 75(4) as mandating a personal hearing opportunity once an adverse decision is contemplated, and found that the absence of a fixed hearing date/time/venue in the show cause notice fails this requirement.The Court followed a consistent doctrinal approach emphasizing adherence to procedural fairness and natural justice in tax assessment proceedings, affirming the necessity of proper notice and hearing before passing adverse orders.