2025 (8) TMI 553 - HC - GST

Ex parte penalty orders set aside for lack of hearing; penalty under Section 125 not imposed after Section 47 late fees

Tvl. Sri Ganesh Murugan Modern Rice Mill (Represented by its Proprietor Jaiganesh) Versus The State Tax Officer, The Branch Manager, Canara Bank, Kallakurichi

The HC set aside the ex parte assessment and penalty orders passed without serving physical notices or providing a hearing, finding a violation of natural ... Levy of late fee u/s 47 and penalty u/s 125 of GST Act - non-filing of return due to the non-serving of the physical copy of the notices - opportunity of hearing not provided - ex-parte assessment order passed - violation of principles of natural justice - HELD THAT:- In the present case, the impugned assessment order has been passed exparte. All the notices and orders were only uploaded in the eportal and no physical copy of the notices were served to the petitioner. According to the petitioner, the petitioner has already been imposed late fee under Section 47 and therefore, no penalty under Section 125 can be imposed on the petitioner. In this regard, the learned counsel has relied upon the judgment of this Court in the case of Tvl. Jainsons Castors & Industrial Products Vs The Assistant Commissioner (ST) Chennai, [2025 (2) TMI 1000 - MADRAS HIGH COURT]. The impugned assessment dated 26.12.2024 and consequential order dated 26.12.2024 passed by the 1st respondent are set aside - the matter is remanded to the 1st respondent for fresh consideration. Petition allowed by way of remand. ISSUES: Whether the impugned order imposing late fee and penalty without physical service of notices and without hearing the petitioner is valid.Whether penalty under Section 125 can be imposed when late fee under Section 47 has already been levied for the same default.Whether the assessment order passed ex parte based solely on notices uploaded on the GST portal, without physical service, complies with principles of natural justice.Whether the matter requires remand for fresh consideration with opportunity of personal hearing. RULINGS / HOLDINGS: The impugned order imposing late fee and penalty was set aside because 'no physical copy of the notices were served' and the petitioner was not afforded an opportunity of personal hearing, rendering the order passed ex parte invalid.Penalty under Section 125 was held to be 'bad in law' when late fee under Section 47 has already been imposed for the same period, relying on the precedent that prohibits double penalization for the same default.The Court emphasized that notices uploaded only on the GST portal do not satisfy the requirement of service necessary to invoke adverse consequences without hearing.The matter was remanded to the Assessing Officer for fresh consideration after the petitioner files a reply, with directions to issue a clear 14 days' notice affording personal hearing before passing any further orders. RATIONALE: The Court applied principles of natural justice requiring that a party must be given notice and an opportunity to be heard before adverse orders are passed, particularly when penalties are involved.The legal framework includes Section 47 (late fee) and Section 125 (penalty) of the GST law, with the Court relying on prior authoritative judgment that prohibits imposition of penalty under Section 125 where late fee under Section 47 has already been imposed for the same default.The Court recognized that mere uploading of notices on the electronic portal does not constitute valid service if no physical copy is served, thus failing to inform the petitioner adequately.The remand to the Assessing Officer reflects a procedural safeguard to ensure compliance with statutory requirements and judicial precedents, and to provide the petitioner a fair opportunity to respond.