2025 (12) TMI 79 - HC - GST

SCN must be effectively communicated under Section 75(4) WBGST; orders set aside, matter remanded for reply

HC held that effective communication of a SCN is a sine qua non for compliance with Section 75(4) of the WBGST Act and the principles of natural justice. ... Rejection of appeal on the ground that the same was filed beyond the condonable period - proper service of SCN not done - petitioner was not aware of the issuance of the show cause notice as the same was uploaded under the “Additional notices and orders” Tab as opposed to the Normal Tab - principles of natural justice - HELD THAT:- It is well settled that there has to be an effective communication of a show cause notice to enable the party against whom any adverse decision is contemplated to reply to the same - Section 75(4) of the WBGST Act, 2017 lays down the general provisions relating to determination of tax. It states that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty or where any adverse decision is contemplated against such person. After going through the show cause notice this Court finds that an adverse decision was contemplated against the petitioner. This Court has already observed that there was no effective communication of the show cause notice as the same was uploaded under the Additional Tab and not under the Normal Tab. Since the petitioner was prevented by sufficient cause for not filing the reply to the show cause notice and to attend the hearing before the adjudicating authority this Court is inclined to grant a last opportunity to the petitioner to contest the proceeding from the stage of filing the reply to show cause notice. The order of adjudication dated July 30, 2024 and the appellate order dated 31st July, 2025 are set aside subject to the condition that the petitioner shall file the reply to the show cause notice dated 2nd May, 2024 within a period of three (3) weeks from the date of receipt of a server copy of this order - Petition allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether uploading the show cause notice under the 'Additional notices and orders' tab instead of the 'Normal' tab constituted effective communication to the assessee. 1.2 Whether, in the absence of effective communication of the show cause notice and consequent lack of opportunity of hearing, the adjudication order under Section 73(9) of the WBGST Act, 2017 and the appellate order rejecting the appeal as time-barred could be sustained. 1.3 Whether, in the facts, the assessee was entitled to be relegated to the stage of filing reply to the show cause notice, and the applicability of the precedent in Sankar Agarwala. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Effective communication of show cause notice via 'Additional notices and orders' tab Legal framework (as discussed) 2.1 The Court noted the settled principle that there must be an 'effective communication' of a show cause notice to enable the noticee, against whom an adverse decision is contemplated, to submit a reply. Interpretation and reasoning 2.2 It was undisputed that the show cause notice was uploaded under the 'Additional notices and orders' tab and not under the 'Normal' tab. 2.3 The Court treated such mode of uploading, in the circumstances, as insufficient to constitute effective communication, given that it prevented the assessee from becoming aware of the notice at the relevant time. Conclusions 2.4 The Court held that there was no effective communication of the show cause notice to the petitioner, as it was uploaded under the 'Additional' tab instead of the 'Normal' tab. Issue 2: Sustainability of adjudication and appellate orders in absence of effective communication and opportunity of hearing under Section 75(4) WBGST Act Legal framework (as discussed) 2.5 Section 75(4) of the WBGST Act, 2017 provides that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty or where any adverse decision is contemplated against such person. Interpretation and reasoning 2.6 On examining the show cause notice, the Court found that an adverse decision was clearly contemplated against the petitioner. 2.7 Given that there was no effective communication of the show cause notice, the petitioner was prevented by sufficient cause from filing a reply and from attending the hearing before the adjudicating authority. 2.8 The appellate authority had dismissed the appeal as time-barred on the ground that it was filed beyond the condonable period, without addressing the foundational issue that the assessee had not effectively received the show cause notice and thus had been denied a real opportunity of hearing. Conclusions 2.9 The adjudication order under Section 73(9) and the appellate order rejecting the appeal as time-barred were held unsustainable and were set aside. Issue 3: Relief of restoring proceedings to the stage of reply to show cause notice and applicability of precedent Interpretation and reasoning 2.10 The Court noted that immediately after becoming aware of the adjudication order, the petitioner preferred an appeal and applied for condonation of delay, indicating bona fides and linking the delay to lack of knowledge of the show cause notice. 2.11 The Court relied on its earlier decision in Sankar Agarwala, where, in an almost identical fact situation, the orders of the original authority and appellate authority were set aside and the assessee was permitted to file a reply to the show cause notice despite the appeal having been dismissed as time-barred. 2.12 Holding that the precedent squarely applied, the Court considered it appropriate to grant a 'last opportunity' to the petitioner to contest the proceedings from the stage of filing reply to the show cause notice, subject to strict conditions and timelines. Conclusions 2.13 The writ petition was allowed. 2.14 The adjudication order dated 30 July 2024 and the appellate order dated 31 July 2025 were set aside. 2.15 The petitioner was permitted, as a last opportunity, to file a reply to the show cause notice dated 2 May 2024 within three weeks from receipt of a server copy of the Court's order, whereafter the adjudicating authority must fix a date of hearing and serve notice of hearing. 2.16 It was made explicit that if the petitioner failed to submit the reply within the stipulated period, the benefit of the Court's order would not enure to the petitioner and the writ petition would stand automatically dismissed without further reference to the Court. 2.17 No order as to costs was made.