2025 (9) TMI 733 - HC - GST

Quashed order for breach of natural justice where portal-only show-cause notices went unnoticed, petitioner given benefit of doubt

M/s Rahul Saree Center Versus State of U.P. and Another

HC found a breach of natural justice where show-cause notices uploaded only to the GST portal went unnoticed by the petitioner, preventing appearance or ... Violation of principles of natural justice - Service of SCN - notices issued under Section 73 of the Act, were uploaded on 'Additional Notices and Orders' Tab of the G.S.T. Portal - petitioner being unaware of issuance of the notices as well as passing of the orders, could neither appear before the authority nor question the validity of the impugned orders within the period of limitation - HELD THAT:- In the case of Ola Fleet Technologies Pvt. Ltd [2024 (7) TMI 1543 - ALLAHABAD HIGH COURT] a co-ordinate Bench of this Court inter alia observed that 'At present, it does appear that the petitioner is entitled to a benefit of doubt. No material exist to reject the contention being advanced that the impugned order was not reflecting under the tab 'view notices and orders'. On merits, as noted in the earlier orders an other dispute exists whether all replies and annexures to the replies as filed by the assessee were displayed to the assessing officer and whether those have been considered. We find, no useful purpose may be served for keeping this petition pending or calling for a counter affidavit or even relegating the petitioner to the available statutory remedy. The entire disputed amount is lying in deposit with the State Government. Therefore, there is no outstanding demand. Accordingly, the writ petition is disposed of, with a direction, the assessee may treat the impugned order as the final notice and submit his written reply within a period of two weeks.' The order impugned dated December 23, 2023 passed by Assistant Commissioner, State Tax, Kanpur Sector-8, Kanpur (B) (Annexure-1 to the writ petition) is quashed and set aside - petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether an order/notices uploaded on the G.S.T. portal under the 'Additional Notices and Orders' tab instead of the 'View Notices and Orders' (or equivalent prescribed tab) constitutes failure of due communication under the Goods and Services Tax Act, 2017 (Section 73) and vitiates subsequent demand proceedings. 2. Whether a taxpayer deprived of actual notice by virtue of the impugned upload is entitled to relief (benefit of doubt) including quashing of the demand order and re-initiation of proceedings by issuance of a fresh notice with statutory opportunity to be heard. 3. Whether prior coordinate-bench decisions on the same issue govern the present matter and the extent to which administrative/technical limitations of the GST portal (GSTN) bear on the validity of communication of notices/orders. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of communication where notices/orders are uploaded under 'Additional Notices and Orders' tab instead of prescribed 'View Notices and Orders' tab Legal framework: Section 73 of the Goods and Services Tax Act, 2017 permits issuance of demands and requires that the taxpayer be afforded notice and an opportunity to be heard; implicit in the statutory scheme is effective communication of notices/orders to enable exercise of remedies within limitation. Precedent treatment: The Court relied upon and followed the reasoning of an earlier coordinate-bench decision addressing identical factual circumstances where the impugned order did not show under the tab normally used by assessees to view notices and orders but instead appeared under an alternate/additional tab; that earlier decision held the assessee entitled to the benefit of doubt and directed fresh service and opportunity to be heard. The Court also referenced earlier orders indicating the same principle (prior writ decisions addressing portal-upload issues). Interpretation and reasoning: The Court accepted the factual finding that the impugned notices/orders were uploaded under the 'Additional Notices and Orders' tab, and not under the tab that would routinely bring them to the taxpayer's attention. In such circumstances, the Court found no material to reject the contention that the order did not effectively reflect on the taxpayer's portal in the prescribed manner. The Court observed that the consequence of such misplacement is that the taxpayer may be unable to seek appropriate remedies within limitation or to appear before the authority, thereby depriving the taxpayer of the procedural safeguards guaranteed by the statute. Ratio vs. Obiter: Ratio - misplacement of notices/orders on the portal such that they do not appear under the tab/mode by which assessees are expected to receive such communications constitutes failure of due communication and vitiates consequent demand proceedings. Obiter - observations on technical limitations of the portal and administrative responsibility of the GSTN to address upload options are ancillary and explanatory. Conclusion: The impugned order was invalidly communicated; the defect in upload sufficed to quash the demand order on grounds of denial of effective notice. Issue 2 - Entitlement to relief and appropriate judicial remedy where effective communication is lacking Legal framework: Principles of natural justice and statutory requirement of notice and opportunity to be heard; equitable relief where statutory procedure has not been meaningfully available to the taxpayer; power of the Court to quash administrative orders and direct fresh proceedings in accordance with law. Precedent treatment: The Court applied the remedy fashioned by the earlier coordinate-bench decision: quash the impugned order and direct the assessing authority to issue a fresh notice in the prescribed manner, allow the taxpayer an opportunity to file reply within a short time, and thereafter to pass a reasoned and speaking order within a stipulated period. The Court noted prior practice of directing re-service and reconsideration where deposit of the disputed amount rendered immediate prejudice remediable by fresh proceedings. Interpretation and reasoning: Given the factual absence of effective communication and the state of the record (including the fact that the disputed amount is deposited), the Court found that no useful purpose would be served by calling for counter-affidavits or relegating the taxpayer to available statutory remedies without first ensuring effective service. The Court construed fairness and statutory procedure to require that the taxpayer be given at least fifteen clear days' notice in the manner prescribed and that the assessing officer consider the taxpayer's replies and annexures and pass an appropriate speaking order within a further defined period. Ratio vs. Obiter: Ratio - where due communication is lacking, the appropriate remedy is to quash the demand/order and direct fresh notice and proceedings to afford the taxpayer the statutory opportunity to be heard; ancillary timelines (e.g., 15 days' clear notice; one month to pass fresh order) are procedural directions adopted to effectuate the core relief. Conclusion: The impugned demand order is quashed and set aside. The assessing officer must issue a fresh notice in the prescribed manner with at least fifteen clear days' notice, permit filing of replies, and thereafter proceed to pass a reasoned order within a stipulated period. Issue 3 - Effect of administrative/technical limitations of the GST portal on validity of communication Legal framework: Administrative arrangements for electronic communication of notices may affect the mechanics of service, but statutory entitlement to effective notice cannot be subordinated to technical anomalies; responsibility for portal design and maintenance lies with the agency running the portal (GSTN), whereas assessing authorities must ensure compliance with prescribed modes of communication. Precedent treatment: The Court noted earlier observations that the assessing officer may not, of their own motion, control certain portal behaviors and that any systemic deficiency may be attributable to the portal operator. Those observations were treated as explanatory of why such errors may occur but did not absolve the consequence that the taxpayer must receive effective communication. Interpretation and reasoning: The Court acknowledged contentions by departmental counsel regarding technical limitations and lack of choice for assessing officers in uploading notices. However, the Court held that absence of an option on the portal does not cure the defect in communication vis-à-vis the taxpayer nor bar judicial relief. The administrative source of the problem may explain why the error occurred but does not negate the legal requirement of effective service and opportunity to be heard. Ratio vs. Obiter: Ratio - technical or administrative limitations of the portal do not cure the legal defect arising from failure of due communication; recognizing such limitations may inform administrative steps but does not preclude setting aside proceedings tainted by lack of effective notice. Obiter - remarks attributing responsibility to the portal operator and urging systemic correction are advisory. Conclusion: Portal limitations are explanatory but not determinative; the Court's relief is warranted despite such limitations and the assessing authority must re-serve notices in the prescribed manner to cure the defect. Cross-references and Procedural Directions Where an order/demand has been quashed for want of effective communication, the Court directed (a) fresh issuance of at least fifteen clear days' notice in the prescribed manner; (b) opportunity for the taxpayer to submit written reply within a short period; and (c) the assessing officer to pass an appropriate reasoned and speaking order within a further stipulated time - reflecting the remedial formula applied by the coordinate-bench authorities relied upon by the Court.