2025 (8) TMI 600 - HC - GST

Order quashed for no personal hearing; GST notice upload not valid service under Section 169 GST Act

Rebekah Metals Versus The Deputy Commercial Tax Officer Thirukazhukundaram Assessment Circle, Chengalpattu

Rebekah Metals Versus The Deputy Commercial Tax Officer Thirukazhukundaram Assessment Circle, Chengalpattu - TMI 1. ISSUES PRESENTED and CONSIDERED1.1 Whether uploading a show cause notice on the GST common portal by itself constitutes valid and effective service when the addressee does not respond and no alternative mode of service is resorted to.1.2 Whether an assessment/order passed without affording an opportunity of personal hearing, where no effective service was proved, is vitiated for want of compliance with principles of natural justice.1.3 Whether the Officer issuing notices is obliged, under Section 169(1) of the GST Act, to explore alternative modes of service (including RPAD) when there is no response to portal communications, and the consequences of failing to do so.1.4 What relief and directions are appropriate where (a) notices were uploaded on the GST portal, (b) the taxpayer asserts non-receipt and no personal hearing was afforded, and (c) a portion of the tax amount has already been recovered from an electronic ledger (ECL).2. ISSUE-WISE DETAILED ANALYSISIssue 1 - Validity and effectiveness of service by uploading on GST portal- Relevant legal framework and precedents: Service of notices under the GST regime may be effected by modes prescribed in Section 169(1) of the GST Act, which contemplates multiple modes of service. The concept of 'effective service' is implicit in procedural requirements and natural justice principles.- Court's interpretation and reasoning: The Court acknowledged that sending notice by uploading on the GST Portal is prima facie a sufficient mode of service. However, sufficiency in form does not equate to effectiveness in practice. Where there is no response from the addressee, mere repetition of portal uploads without considering alternative prescribed modes reduces service to 'empty formalities'.- Key evidence and findings: The administrative record showed that the show cause notice was uploaded on the GST Portal. The petitioner asserted non-awareness of the upload and non-receipt of the original notice. The respondent conceded that no personal hearing was afforded before passing the impugned order.- Application of law to facts: Given the absence of any response to portal notices and the admitted lack of personal hearing, the Court concluded that relying solely on portal uploads-without exploring other Section 169(1) modes-did not achieve effective service. The Officer should have applied mind to alternative modes when the portal route failed to elicit a response.- Treatment of competing arguments: The respondent argued that portal upload sufficed and the taxpayer failed to avail the opportunity. The Court accepted the legal sufficiency of portal uploads in principle but rejected the proposition that sufficiency absolves the Officer from taking further steps where the notice remains unacknowledged and unresponded to.- Conclusion: Portal upload is an acceptable mode but not conclusively effective when unacknowledged; the Officer must explore other modes under Section 169(1) to ensure effective service.Issue 2 - Requirement of personal hearing and validity of ex parte assessment/order- Relevant legal framework and precedents: Principles of natural justice require that where a show cause notice proposes adverse consequences, the affected person must be given an opportunity of being heard (personal hearing) before final orders are passed; ex parte orders passed without such an opportunity may be vitiated.- Court's interpretation and reasoning: The Court found that the impugned assessment order confirmed the proposals in the show cause notice without affording any opportunity of personal hearing. The Court treated this as a denial of effective opportunity of hearing, particularly in the factual context where service was not established to be effective.- Key evidence and findings: Respondent admitted that no personal hearing was provided prior to passing the impugned order. There was no record of alternative service being used to notify the petitioner of the hearing or the notice.- Application of law to facts: The combination of unacknowledged portal notices and absence of personal hearing meant the assessment was effectively ex parte. Ex parte orders based on such formalistic service were held to be improper because they defeat the object of GST proceedings and invite multiplicity of litigation.- Treatment of competing arguments: While the respondent relied on the procedural sufficiency of portal upload, the Court emphasized that where no response is received, the obligation to afford a real opportunity (personal hearing) remains and cannot be dispensed with by formal uploads.- Conclusion: The assessment/order passed without personal hearing in the absence of effective service was vitiated and warranted setting aside and fresh consideration.Issue 3 - Duty to explore alternative modes of service under Section 169(1) (including RPAD)- Relevant legal framework and precedents: Section 169(1) of the GST Act prescribes modes of service; administrative officers must effect service in a manner that achieves the objectives of the statute. Registered Post Acknowledgement Due (RPAD) is an acknowledged alternative mode.- Court's interpretation and reasoning: The Court held that where repeated portal reminders yield no response, the Officer should 'apply his/her mind' to resort to other modes prescribed in Section 169(1), preferably RPAD, to secure effective service. Failure to do so renders service ineffective and reduces compliance to mere formalism.- Key evidence and findings: The file lacked evidence of alternative service steps taken after non-response to portal uploads. The Court observed that repeated portal reminders without further action were insufficient.- Application of law to facts: The Officer's failure to explore other prescribed modes when the portal mode did not elicit response meant the statutory mechanism for service was not properly utilized; this undermined the validity of downstream enforcement (assessment and recovery).- Treatment of competing arguments: The respondent did not dispute Section 169(1) as a source of modes but maintained portal upload competence; the Court nonetheless required proactive exploration of alternatives where portal service remained unproductive.- Conclusion: Officers must proactively explore alternative modes under Section 169(1) (RPAD preferred when appropriate) to effectuate effective service; failure to do so can invalidate subsequent ex parte action.Issue 4 - Appropriate remedy where impugned order passed without effective service or personal hearing and partial recovery from ECL has occurred- Relevant legal framework and precedents: Where procedural infirmity (ineffective service/no personal hearing) is established, the remedy is to set aside the impugned order and remit for fresh consideration with directions to afford a hearing; courts tailor relief to secure adjudicative fairness without prejudging merits.- Court's interpretation and reasoning: The Court determined that the appropriate remedy was to set aside the impugned order and remit the matter to the respondent for fresh consideration, ensuring that the petitioner is given an opportunity to file reply/objections and to be heard personally. The Court considered the fact of partial recovery from the ECL but did not allow that recovery to foreclose the need for a proper adjudicatory process.- Key evidence and findings: It was established that 55% of the disputed tax amount had been recovered from the petitioner's ECL prior to the order being set aside. The respondent had suggested remand subject to payment of 25% as agreed by the petitioner; that arrangement was not imposed by the Court.- Application of law to facts: On the facts, remand with clear procedural directions was necessary to cure the procedural defects and to allow adjudication on merits after hearing. The Court provided specific time-limited directions to operationalize that remedy.- Treatment of competing arguments: The respondent sought remand on condition of partial payment; the Court remitted the matter without imposing the payment condition, instead directing procedural steps (reply within three weeks; 14 days clear notice fixing personal hearing) to be followed expeditiously.- Conclusion: The impugned order was set aside and the matter remanded. Directions given: petitioner to file reply/objection with documents within three weeks of receipt of the order copy; respondent to consider the reply and issue a 14 days clear notice fixing the date of personal hearing; respondent to pass appropriate orders on merits and in accordance with law after hearing, expeditiously. No costs awarded.Cross-references and final observations- The analysis on service (Issue 1) and the duty to explore alternatives (Issue 3) are interdependent: ineffective service through a single mode precipitated the failure to afford a personal hearing (Issue 2), which in turn required the remedial course (Issue 4).- The Court emphasized administrative responsibility: formal compliance with a single mode of service is insufficient if it does not secure actual notice; Officers must ensure notices/orders are served effectively to achieve the object of the GST Act and to avoid multiplication of litigation.- The presence of partial recovery from the ECL does not validate an ex parte order founded on ineffective service and no hearing; procedural fairness must be afforded before final adjudication on merits.