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 hearing as mandated by Section 75(4) of the BGST Act, 2017. The Court found that notices were improperly served by uploading under incorrect headings, and no personal hearing date was fixed when the show cause notice was issued. Since the statute requires a hearing opportunity before any adverse decision, the absence of such hearing rendered the impugned orders invalid. Consequently, the HC set aside the assessment order and demand notice for non-compliance with the principles of natural justice and statutory procedure. The application was 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.

---