Case Law Details
Udayraj Yadav Proprietor-Zenith Creative Services Vs Sales Tax Officer Class II AVATO Ward 96 Zone 09 Delhi & Anr. (Delhi High Court)
In a significant judgment, the Delhi High Court has quashed a GST demand of ₹12,92,704 against Udayraj Yadav, proprietor of Zenith Creative Services, due to improper communication of the Show Cause Notice (SCN) via the GST portal. The case, Udayraj Yadav vs Sales Tax Officer Class II AVATO Ward 96 Zone 09 Delhi & Anr., highlights the critical importance of clear communication in tax proceedings.
Background of the Case
The petitioner, Udayraj Yadav, was unaware of the initiation of proceedings against him due to the SCN being uploaded under the “Additional Notices” category on the GST portal. The SCN, dated September 23, 2023, proposed a demand of ₹12,92,704. The petitioner argued that he did not receive any other form of communication, and as a result, he could not respond to the notice.
Court’s Observations
The Delhi High Court took note of similar judgments by the Madras High Court, where the issues arising from the bifurcation of notices into different categories on the GST portal were discussed. Specifically, in cases like M/s East Coast Constructions and Industries Ltd. vs. Assistant Commissioner (ST) and Murugesan Jayalakshmi vs. State Tax Officer, the courts had addressed the confusion caused by notices being uploaded under separate headings.
Improper Communication on GST Portal
The petitioner’s counsel argued that the SCN was placed under “Additional Notices and Orders” in the User Services menu, instead of the “View Notices and Orders” tab. This misplacement led to the petitioner missing the notice, thereby denying him the opportunity to respond. The Madras High Court had earlier acknowledged this issue and noted that the design of the web portal contributed to such oversights.
Judgment and Implications
The Delhi High Court set aside the impugned order dated December 4, 2023, which had confirmed the demand and included a penalty. The court directed the respondents to reopen the portal for the petitioner to file a response to the SCN. It was mandated that the Proper Officer re-adjudicate the SCN after granting the petitioner an opportunity for a personal hearing.
Importance of Proper Notification
This judgment underscores the importance of effective communication in legal and administrative proceedings. The court emphasized that the failure to notify the petitioner properly resulted in a significant procedural lapse, which warranted the setting aside of the demand order. The decision mandates adherence to proper notification procedures to ensure fairness and transparency in tax administration.
Conclusion
The Delhi High Court’s decision in the case of Udayraj Yadav vs Sales Tax Officer Class II AVATO Ward 96 Zone 09 Delhi & Anr. serves as a crucial reminder for tax authorities to ensure clear and effective communication with taxpayers. By quashing the ₹12 lakh GST demand due to improper notification, the court has highlighted the necessity for administrative processes to be both user-friendly and transparent. This judgment will likely prompt further scrutiny and potential redesign of the GST portal to prevent such issues in the future, ensuring taxpayers receive all pertinent communications in a timely and accessible manner.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 04.12.2023 whereby the impugned Show Cause Notice dated 23.09.2023, proposing a demand of Rs.12,92,704.00 against the petitioner has been disposed of and a demand including penalty had been created against the Petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Act).
2. Issue notice. Notice is accepted by learned counsel for respondents. With the consent of parties, the petition is taken up for final disposal.
3. Learned counsel for petitioner submits that the Petitioner was unaware of the initiation of any such proceedings and accordingly could not respond to the same. He submits that the said Show Cause Notice was uploaded on the portal in the category of „Additional Notices‟ and was not communicated to the petitioner through any other mode of communication. He further submits that since the notice was merely uploaded on the web portal under the tab of “Additional Notices and Orders”, petitioner was unaware of any such proceedings initiated against it.
4. Reference may be had to the judgment of the High Court of Madras in W.P. No.26457/2023, titled M/s East Coast Constructions and Industries Ltd. vs. Assistant Commissioner (ST) dated 11.09.2023, wherein the High Court of Madras has noticed that communications are placed under the heading of “View Notices and Orders” and “View Additional Notices and Orders”. The Madras High Court had directed the respondents to address the issue arising out of posting of information under two separate headings. As per the petitioner, the Menu “View Additional Notices and Orders” were under the heading of “User Services” and not under the heading “View Notices and Orders”.
5. This issue is further highlighted by another judgment of the Madras High Court dated 31.07.2023 in W.P. No.22369/2023 and other connected petitions, wherein the Madras High Court has noticed as under:-
“3. The only ground on which the, the impugned orders are under challenge is that the notices, which preceded the impugned orders were hosted in the Dashboard of the petitioner meant for „Additional Notices and Orders‟ whereas, the notices should have been hosted by the respondent in the Dash Board for „View Notices and Orders‟.4. The learned counsel for the petitioner has drawn attention to the manual copy given by the respondent in the web portal, which reads as under:-
“How can I view or download the notices and demand orders issued by the GST tax authorities?
To view or download the notices and demand orders issues by the GST tax authorities, perform the following steps:
1. Access thegst.gov.in URL. The GST Home page is displayed.
2. Login to the GST Portal with valid credentials.
3. Click the Services > User Services > View Notices and Orders command.
5. It is submitted that had the notice been uploaded in the correct place, the petitioner would have seen it and replied to the same and participated in the proceedings. Since the Notices and the Orders were hosted in the Dashboard of the petitioner meant for “Additional Notices and Orders”, the petitioner failed to notice and file a reply to the Show Cause Notice.
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9. The problem has arisen on account of the complex architecture of the web portal. It has been designed to facilitate easy access of informations. It has however resulted in the petitioner failing to notice the notice that was issued to the petitioner prior to the impugned order on 20.03.2023. It went unnoticed by the petitioner, as a result of which, the impugned orders have been passed on 29.04.2023.”
6. Attention is also drawn to yet another judgment of Madras High Court dated 08.02.2024 in Writ Petition No.2746/2024, titled Murugesan Jayalakshmi Vs. State Tax Officer, wherein the Madras High Court has noticed that the said issue has been addressed and the portal has been redesigned and both the “View Notices” tab and “View Additional Notices” tab are under one heading.
7. Clearly, petitioner has made out a case that Petitioner has missed out the receipt of the notice as it was merely uploaded on the portal under the category of “Additional Notices” tab and accordingly could not respond to the Show Cause Notice.
8. In view of the above, impugned order 04.12.2023 is set aside. Since the only reason for passing the impugned order is that Petitioner had not filed any reply/explanation, Petitioner needs to be granted one opportunity to respond to the Show Cause Notice and thereafter, the Show Cause Notice to be re-adjudicated.
9. Respondent are directed to open the portal to enable the Petitioner to file a response to the said Show Cause Notice dated 23.09.2023 which shall be filed within a period of four weeks. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75 (3) of the Act.
10. It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party. All rights and contentions of parties are reserved.
11. Petition is disposed of in the above terms.
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