Case Law Details
Health @ Home Vs Deputy State Tax Officer (Madras High Court)
GST Assessment Set Aside as Portal-Only Notices Were Held Ineffective in the Facts of the Case: Madras High Court
The writ petition challenged the order dated 09.01.2024, the consequential assessment order dated 21.08.2024, and sought a direction to the respondents to furnish details in the auto-populated GSTR-2A and thereafter proceed in accordance with the provisions of the Goods and Services Tax Act, 2017.
The petitioner submitted that its GST registration had been cancelled on 19.12.2018. Subsequently, the respondent issued a show cause notice and reminder notices by uploading them on the GST portal. Since the registration had already been cancelled, the petitioner stated that it had no occasion to monitor the GST portal and was therefore unaware of these notices. As no reply was filed, the respondent confirmed the proposals contained in the show cause notice and passed the assessment order dated 21.08.2024. Thereafter, the second respondent issued a bank attachment order dated 28.01.2025. According to the petitioner, it became aware of the assessment order only after receiving information from Karur Vysya Bank regarding the attachment of its bank account.
The petitioner contended that the assessment order was passed in violation of the principles of natural justice since no opportunity of hearing had been provided before the order was passed. The petitioner also expressed willingness to deposit 10% of the disputed tax if the matter was remanded for fresh consideration and requested lifting of the bank attachment subject to such payment.
The respondents fairly submitted that, since the petitioner had voluntarily offered to deposit 10% of the disputed tax, the Court could consider the relief sought.
The Court noted that the show cause notice had been uploaded on the GST portal. While acknowledging that service through the GST portal constitutes valid service, the Court observed that where repeated reminders elicited no response, the officer should have applied his or her mind and explored other modes of service prescribed under Section 169 of the GST Act. The Court observed that relying only on portal uploads in such circumstances would amount to mere compliance with formalities rather than effective service. It further stated that passing an ex parte order without attempting other prescribed modes of service would only result in unnecessary litigation and consume the time of tax authorities, appellate forums, and the Court. The Court observed that officers should explore other modes of service under Section 169(1), preferably by Registered Post with Acknowledgement Due (RPAD), to effectively achieve the object of the GST Act.
Finding that the petitioner had not been afforded an effective opportunity to respond or a personal hearing, the Court set aside the assessment order dated 21.08.2024 and remanded the matter for fresh consideration.
The Court directed the petitioner to deposit 25% of the disputed tax within two weeks, as voluntarily offered, and thereafter file a reply along with supporting documents within a further two weeks. The respondent was directed to consider the reply, issue a clear 14-day notice providing an opportunity of personal hearing, and decide the matter in accordance with law. The Court further directed that upon production of proof of payment of 10% of the disputed tax by the petitioner, the department should immediately issue appropriate directions to the petitioner’s banker for de-freezing the bank account. The writ petition was disposed of without costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr.V.Prashanth Kiran, learned Government Advocate (Taxes), takes notice on behalf of the respondents. With consent, the main Writ Petition is taken up for final disposal at the stage of admission itself.
2. The challenge in this Writ Petition is to the order dated 09.01.2024 passed by the first respondent and the consequential order dated 21.08.2024 and for a direction to the respondent to furnish details in Auto populated GSTR-2A and thereafter take action in accordance with the provisions of the Goods and Service Tax Act, 2017.
3. The learned counsel for the petitioner would submit that the petitioner’s registration was cancelled on 19.12.2018. Subsequently, the first respondent has issued a show cause notice as well as the reminder notices to the petitioner and the same were uploaded in the GST portal. Since the Petitioner’s GST registration was cancelled the petitioner has no occasion to view the GST Portal and therefore not aware of the said notices. Hence, the petitioner could not file its reply. Since the petitioner failed to file reply to the said show cause notice, the first respondent has confirmed the proposals contained in the show cause notice and passed the present impugned order dated 21.08.2024. Subsequently, the 2nd respondent passed the attachment order dated 28.01.2025 attaching the bank account of the petitioner. The petitioner came to know of the impugned order. Only after getting information from the Karur Vysya Bank, regarding the impugned assessment order, the petitioner came to know of the impugned order ,
4. Further, he would submit that the impugned order suffers from violation of principles of natural justice and is liable to be aside, as the petitioner has not been heard before passing the impugned order.
4.1. It is also submitted by the learned counsel for the petitioner that the petitioner is ready and willing to deposit 10% of the disputed tax, in the event, this Court is inclined to set aside the impugned order and remand the matter back to the Authority for fresh consideration. He would further submit that there is bank attachment and the same may be lifted, subject to the payment of 10% of the disputed tax. Hence, he prayed for appropriate directions.
5. The learned Government Advocate (Taxes) for the respondents fairly submitted that since the petitioner has voluntarily come forward to deposit 10% of the disputed tax, the prayer sought for by the petitioner may be considered.
6. Considering the above submissions made by the learned counsel on either side and upon perusal of the materials, it is evident that the impugned show cause notice was uploaded on the GST Portal Tab. According to the petitioner, the petitioner was not aware of the issuance of the 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.
7. 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. Thus, when there is no response from the tax payer to the notice sent through a particular mode, the Officer who is issuing notices should strictly explore the possibilities of sending notices through some other mode as prescribed in Section 169(1) of the Act, preferably by way of RPAD, which would ultimately achieve the object of the GST Act.
8. Therefore, this Court finds that there is a lack of opportunities being provided to serve the notices/orders etc., effectively to the petitioner. Hence, this Court is inclined to set-aside the impugned order with terms, by issuing the following directions:-
i. The impugned order passed by the first respondent dated 21.08.2024 is set aside.
ii. Consequently, the matter is remanded to the first respondent for fresh consideration.
iii. The petitioner is granted liberty to deposit 25% of the disputed tax, which the petitioner themselves had voluntarily came forward to make such payment, within a period of two weeks from the date of receipt of a copy of this order.
iv. Thereafter, the petitioner is directed to file a reply along with supportive documents within a period of two weeks.
v. Thereupon, the first respondent is directed to consider the reply and shall issue a clear 14 days notice affording an opportunity of personal hearing to the petitioner and shall decide the matter in accordance with law.
vi. Upon production of proof with regard to the payment of 10% of the disputed tax made by the petitioner, the first respondent-Department is directed to issue appropriate direction on the petitioner’s banker towards de-freezure of the petitioner’s bank account forthwith.
9. With the above observations & directions, this Writ Petition is disposed of. No costs. Consequently, connected Miscellaneous Petitions are closed.
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