2025 (12) TMI 938 - HC - GST

SCN and GST order without reasons quashed as nullity, violating Section 75(4)/(6) CGST natural justice requirements; bank attachment lifted

HC held that issuance of SCN and adjudication order solely in summary forms (Forms GST DRC-01 and DRC-07), without particulars or reasons, violated ... Challenge to SCN in summary form i.e. Form GST DRC – 01 as also adjudication order communicated to the petitioner in summary form i.e. in Form GST DRC – 07 - SCN was issued to the petitioner was only in the summary form and no details were provided so as to enable the petitioner to respond thereto appropriately - Violation of principles of natural justice - HELD THAT:- In the facts of the present case it is evident that the order that has been passed and communicated to the petitioner has remained in summary form. It is bereft of any detail and sans any reason. Such an order cannot sustain scrutiny under Article 226 of the Constitution of India. It is settled law that an order without reasons is a nullity more so when the same has civil and evil consequences. Furthermore, it is apparent and evident that no opportunity of hearing has been granted to the petitioner in terms of the mandate of Section 75(4) of the said Act of 2017 although an adverse decision was contemplated. On the twin grounds aforesaid, the order impugned dated July 15, 2024 is set aside. Since it is evident that even the show cause notice is bereft of relevant particulars, it would not be possible for the petitioner to reply to the same in the absence of the factual and other details. Accordingly, the respondent no. 1 is directed to issue the detailed show cause notice to the petitioner in support of the summary Form DRC-01 within two weeks from the date of communication of this order - Since the adjudication order has been set aside on the ground of the same not being in conformity with the provisions of Section 75(6) of the said Act of 2017 as also on the ground of the same having been passed in violation of principles of natural justice, the attachment of the petitioner’s Bank account on the strength of the said order shall stand lifted. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED ? Whether the writ petition was liable to be rejected on the ground of delay when the impugned notice and adjudication order were only uploaded on the GST Portal under the 'additional notices and orders' tab. ? Whether service of notices and orders by uploading them under the 'additional notices and orders' tab on the GST portal constitutes proper service. ? Whether an adjudication order issued only in summary form (Form GST DRC-07), bereft of reasons and relevant factual details, is valid under Section 75(6) of the WBGST Act, 2017/CGST Act, 2017 and in light of principles of natural justice. ? Whether there was violation of Section 75(4) of the WBGST Act, 2017/CGST Act, 2017 and principles of natural justice by not granting an opportunity of hearing before passing an adverse adjudication order. ? Consequential directions regarding issuance of a fresh detailed show cause notice, conduct of de novo adjudication, treatment of limitation, and effect on the garnishee/attachment of the petitioner's bank account. 2. ISSUE-WISE DETAILED ANALYSIS A. Delay in filing writ petition and propriety of service via 'additional notices and orders' tab Legal framework (as discussed): The Court referred to its earlier decision, relying on a Division Bench, to hold that service of notices and orders by uploading them under the 'additional notices and orders' tab on the GST portal is improper. Interpretation and reasoning: The adjudication order was passed on 15 July 2024, while the writ petition was filed on 14 October 2025. The petitioner asserted unawareness of the show cause notice and order because they were only uploaded under the 'additional notices and orders' tab, and came to know of the proceedings only upon receipt of a garnishee notice issued to its bank under Section 79(1)(c) read with Rule 145(1). The Court, following its prior judgment and the cited Division Bench authority, held that uploading notices and orders in the 'additional notices and orders' tab is an improper mode of service. On that basis, the plea of delay was rejected and the writ petition was entertained. Conclusions: The writ petition was not barred by delay because the impugned notice and order were not properly served; uploading them under the 'additional notices and orders' tab on the GST portal did not constitute valid service. B. Validity of adjudication order issued only in summary form without reasons (Section 75(6) and principles of natural justice) Legal framework (as discussed): Section 75(6) of the 2017 Act mandates that the proper officer must set out the relevant facts and the basis of the decision in the adjudication order. The Court also reiterated the general legal principle that any order passed by a quasi-judicial authority, and in most cases even by an administrative authority, must be informed by reasons, particularly where civil or 'evil' consequences follow. Interpretation and reasoning: The order impugned was communicated only in summary form in Form GST DRC-07 and contained no factual narration or reasoning. The Court found the order to be 'bereft of any detail and sans any reason.' An order without reasons, especially one with civil and adverse consequences, cannot withstand scrutiny under Article 226 of the Constitution. The Court treated such an unreasoned order as a nullity, explicitly finding it non-compliant with the mandate of Section 75(6) and contrary to settled law requiring reasoned orders. Conclusions: The adjudication order, issued only in summary form and lacking reasons and relevant factual details, violated Section 75(6) and the requirement that quasi-judicial orders be reasoned, rendering it unsustainable and liable to be set aside. C. Absence of hearing and violation of Section 75(4) and principles of natural justice Legal framework (as discussed): Section 75(4) of the 2017 Act requires that an opportunity of hearing be granted where an adverse decision is contemplated. This is aligned with the broader principles of natural justice mandating reasonable opportunity to be heard before passing orders with adverse civil consequences. Interpretation and reasoning: The Court noted that the proceedings were concluded ex parte. It was 'apparent and evident' that no opportunity of hearing had been granted to the petitioner, despite an adverse decision being contemplated. Given the absence of both a detailed show cause notice and a hearing, the Court held that the adjudication was in violation of Section 75(4) as well as basic principles of natural justice. Conclusions: The adjudication order was vitiated by failure to afford the petitioner an opportunity of hearing as required by Section 75(4), constituting a breach of natural justice and forming an independent ground for setting aside the order. D. Validity of the summary show cause notice and directions for fresh adjudication Interpretation and reasoning: The show cause notice had been issued only in summary form (Form DRC-01) and, like the order, did not contain relevant particulars or factual details. The Court found that, in the absence of such details, it would not be possible for the petitioner to file an effective reply. Since both the notice and order were in summary form and devoid of requisite particulars, they were held to be deficient. On this basis, while setting aside the adjudication order, the Court did not quash the entire proceedings but directed rectification through issuance of a detailed show cause notice. Conclusions and directions: ? The impugned adjudication order dated 15 July 2024 was set aside on two grounds: (i) non-compliance with Section 75(6) (absence of reasons and details), and (ii) violation of Section 75(4) and natural justice (no hearing). ? Respondent no. 1 was directed to issue a detailed show cause notice to the petitioner, in support of the summary Form DRC-01, within two weeks from communication of the Court's order. ? The petitioner was granted liberty to file a reply to the detailed show cause notice within two weeks of its receipt. ? The adjudicating authority was directed to pass an appropriate order in accordance with law within two weeks from receipt of the petitioner's reply. ? It was clarified that if the petitioner fails to file a reply within the stipulated two weeks, the adjudicating authority will be free to proceed ex parte. ? The Court expressly stated that it had not examined the merits of the underlying tax dispute and that all points were left open for decision by the adjudicating authority. E. Effect on attachment and treatment of limitation Interpretation and reasoning: Since the adjudication order, which formed the basis for coercive recovery and attachment, was set aside as being contrary to Section 75(6) and principles of natural justice, all consequential actions flowing solely from that order could not be sustained. Conclusions and directions: ? The attachment of the petitioner's bank account, effected on the strength of the impugned adjudication order, was ordered to stand lifted. ? It was clarified that the petitioner would not be entitled to plead the bar of limitation against the adjudication proceedings by relying on the Court's present order, except to the extent the petitioner was already entitled to raise such a limitation plea as on the date of the original summary show cause notice (13 June 2024).