2025 (8) TMI 1621 - HC - GST

Challenged assessment order set aside for cancelling GST registration without personal hearing; officer ignored s.169 alternative service

HC set aside impugned assessment order cancelling GST registration for failure to afford personal hearing after show cause notice was only uploaded on the ... Violation of principles of natural justice - Cancellation of GST registration of petitioner - opportunity of personal hearing not provided - petitioner is willing to pay 10% of the disputed tax amount to the respondent - HELD THAT:- In the case on hand, it is evident that the show cause notice was uploaded on the GST Portal Tab. According to the petitioner, he was not aware of the issuance of the said show cause notice issued through the GST Portal and the original of the said show cause notice was not furnished to them. In such circumstances, this Court is of the view that the impugned assessment order came to be passed without affording any opportunity of personal hearing to the petitioner, confirming the proposals contained in the show cause notice. No doubt, sending notice by uploading in portal is a sufficient service, but, the Officer who is sending the repeated reminders, inspite of the fact that no response from the petitioner to the show cause notices etc., the Officer should have applied his/her mind and explored the possibility of sending notices by way of other modes prescribed in Section 169 of the GST Act, which are also the valid mode of service under the Act, otherwise it will not be an effective service, rather, it would only fulfilling the empty formalities. Merely passing an ex parte order by fulfilling the empty formalities will not serve any useful purpose and the same will only pave way for multiplicity of litigations, not only wasting the time of the Officer concerned, but also the precious time of the Appellate Authority/Tribunal and this Court as well. The petitioner is willing to pay 10% of the disputed tax amount to the respondent. In such view of the matter, this Court is inclined to set aside the impugned order dated 04.02.2025 passed by the respondent - The impugned order dated 04.02.2025 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent within a period of four weeks from the date of receipt of a copy of this order. The setting aside of the impugned order will take effect from the date of payment of the said amount. Petition disposed off by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment/order passed after service of show-cause notice exclusively by uploading on the GST common portal, without affording opportunity of personal hearing, complies with principles of natural justice. 2. Whether service by uploading notices on the GST portal is sufficient in all circumstances, and what obligations devolve on the Officer when there is no response from the taxpayer to such portal notices. 3. Whether remand for fresh consideration is appropriate where service was effected through the portal and the registered person had cancelled GST registration and where the taxpayer is willing to make an interim payment of a portion of the disputed tax. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Compliance with principles of natural justice where notices were uploaded on GST portal but no personal hearing was afforded Legal framework: Principles of natural justice require that a party be given an effective opportunity of hearing before adverse orders are passed. In GST proceedings, show-cause notices and opportunities of hearing must be afforded in a manner that effectuates service and permits meaningful response prior to confirming proposals contained in the show-cause notice. Precedent Treatment: The judgment does not invoke or rely upon any specific precedent; no earlier decisions were expressly followed, distinguished or overruled in the record. Interpretation and reasoning: The Court observed that although the show-cause notice was uploaded on the GST portal, the petitioner was unaware of the issuance and did not receive the original notice. The absence of any personal hearing prior to passing the impugned order confirmed the proposals made in the show-cause notice. The Court held that mere formal compliance by portal-upload, where it does not translate into effective service and opportunity to be heard, falls short of natural justice. Ratio vs. Obiter: Ratio - An assessment/order that confirms proposals in a show-cause notice uploaded on the portal, without affording an effective opportunity of personal hearing where the taxpayer was unaware of the notice, violates principles of natural justice. Obiter - Observations about the insufficiency of portal-upload in some circumstances and the risk of multiplicity of litigation were made to explain the reasoning. Conclusion: The impugned order passed without providing a personal hearing was set aside as violative of principles of natural justice, and the matter was remanded for fresh consideration. Issue 2 - Sufficiency of service by uploading on the GST portal and duties of the Officer when there is no response Legal framework: Service by uploading on the GST portal is recognized under the statute as a mode of service. Section 169(1) of the GST Act prescribes alternative modes of service (including electronic modes and sending by post/RPAD) which are valid methods of effecting notice. Precedent Treatment: No precedents were cited; the Court reasoned from statutory prescription and practical requirements of effective service. Interpretation and reasoning: The Court acknowledged that portal upload can be sufficient service but emphasized that where repeated reminders produce no response, the Officer must apply mind and explore other statutory modes of service (Section 169(1)), preferably RPAD, to effectuate notice. Reliance solely on portal upload, without attempting other prescribed modes when there is no response, amounts to empty formality and is not effective service. Such mechanical reliance undermines the object of the GST Act and invites multiplicity of litigation. Ratio vs. Obiter: Ratio - Where portal notices elicit no response, the Officer must explore other modes of service under Section 169(1) to ensure effective service; failure to do so may render subsequent ex parte orders infirm. Obiter - Preference for RPAD as an effective mode was stated as a practical suggestion rather than an absolute mandate in every case. Conclusion: Service by portal alone may be inadequate in circumstances of no response; Officers are obligated to explore alternative statutory modes to ensure effective service and to respect natural justice. Issue 3 - Remand conditioned on interim payment where registration was voluntarily cancelled and communications allegedly should have been sent to registered e-mail Legal framework: Courts may remit matters for fresh consideration where procedural infirmity (lack of effective service/hearing) is established, and may condition remand upon interim payments to balance interests of revenue and taxpayer. Where GST registration is cancelled, communications are to be sent to the e-mail id provided, subject to statutory modes of service. Precedent Treatment: No case law was referenced; the Court exercised supervisory jurisdiction to fashion equitable relief consistent with statutory scheme and principles of natural justice. Interpretation and reasoning: The Court noted the petitioner's voluntary cancellation of GST registration and the submission that communications should have been sent to the petitioner's e-mail. Respondent admitted no personal hearing was provided. Given the procedural defect and the petitioner's willingness to pay 10% of disputed tax, the Court considered remand appropriate but balanced by conditioning relief on payment and structured further proceedings: payment within four weeks; filing of reply within three weeks of payment; issuance of 14 days' clear notice fixing date of personal hearing; and disposal on merits thereafter. Ratio vs. Obiter: Ratio - Where an order is set aside for procedural infirmity of ineffective service/hearing, a remand for fresh consideration with appropriate conditions (including interim payment and directions for personal hearing) is an appropriate and permissible remedy. Obiter - Specific timelines and percentages (10% payment, four-week/three-week/14-day periods) were directions tailored to facts and may be treated as case-specific procedural guidance rather than universally binding rules. Conclusion: The impugned order was set aside and the matter remanded on condition of payment of 10% of disputed tax; petitioner to file reply and respondent to afford personal hearing and pass orders on merits in accordance with law. Cross-references and Practical Observations - Cross-reference: Issues 1 and 2 are interlinked - the insufficiency of portal-upload (Issue 2) is central to the natural justice violation found (Issue 1). - Practical observation: Mechanical compliance with portal-based service, without reasonable steps to effectuate notice by alternative statutory modes when no response is received, will not satisfy the statutory and constitutional imperative of effective notice and hearing.