Mayur Industries Traders Vs Assistant Commissioner (ST) (Madras High Court)
Summary: The Madras High Court conditionally set aside the assessment order dated 19.08.2024 concerning financial year 2019-2020 and remanded the matter for fresh consideration. The petitioner submitted that its GST registration had been cancelled on its application with effect from 30.06.2024 and that, believing proceedings relating to the registration had ended, it had not attended to subsequent online communications. It alleged that the assessment concerning incorrect tax liability declared in Form GSTR-3B had been completed without an effective opportunity to submit its accounts, invoices, returns, ITC particulars and reconciliation. The Government Advocate stated that notices had been uploaded on the portal but acknowledged that no personal hearing had been provided and agreed to remand subject to payment of 20% of the disputed tax.
The Court recognised that uploading a notice on the portal constitutes sufficient service, but held that officers should explore other modes under Section 169 of the GST Act, preferably RPAD, where repeated portal communications receive no response. In the circumstances, including cancellation of registration, absence of physical service and failure to send communications to the provided email address, the Court found ineffective service and denial of personal hearing contrary to natural justice. It directed payment of 20% of the disputed tax within four weeks of receipt of the order, with the setting aside becoming effective only upon payment. The petitioner must submit its reply and supporting documents within three weeks thereafter. The respondent must consider the reply, give 14 clear days’ notice of personal hearing and pass a fresh order on merits in accordance with law as expeditiously as possible. The writ petition was disposed of without costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present Writ Petition has been filed challenging the assessment order in Form GST DRC-07 dated 19.08.2024.
2. The learned counsel for the petitioner submits that in respect of the financial year 2019-2020, the respondent initiated proceedings alleging that the petitioner had not declared the correct tax liability while filing its returns in Form GSTR-3B. Subsequently, the petitioner’s GST registration was cancelled upon the taxpayer’s application with effect from 30.06.2024. The petitioner was under the bona fide impression that all proceedings concerning the GST registration had come to an end and that there were no further proceedings requiring its immediate attention, particularly regarding online communications. Under such circumstances, the impugned order came to be passed. The petitioner was not afforded an effective opportunity to place its explanation and supporting documents before the respondent prior to the passing of the impugned order. The proceedings were concluded without properly considering the petitioner’s actual business transactions, books of account, tax invoices, returns, Input Tax Credit (ITC) particulars, and the reconciliation of the alleged differences. He further contends that the mandatory requirement of an effective personal hearing under Section 75(4) of the CGST Act has not been complied with, and that the order has been passed in gross violation of the principles of natural justice.
3. Further, the learned counsel for the petitioner submitted that the petitioner is willing to deposit 20% of the disputed tax amount with the respondent.
4. On the other hand, the learned Government Advocate appearing for the respondent submits that the respondent had uploaded the notices on the GST online portal, but the petitioner failed to avail of the said opportunity. However, he fairly admitted that no opportunity of a personal hearing was provided to the petitioner prior to the passing of the impugned order. Furthermore, since the notices were issued subsequent to the cancellation of the petitioner’s GST registration, he requested this Court to remit the matter back to the respondent for fresh consideration, subject to the condition that the petitioner deposits 20% of the disputed tax amount.
5. Heard the learned counsel for the petitioner and the learned Government Advocate (Taxes) for the respondent, and also perused the materials available on record.
6. In the case on hand, it is evident that the show-cause notice was uploaded only under the specific tab of the GST portal. According to the petitioner, they were not aware of the issuance of the said show-cause notice via the portal, as it was issued subsequent to the cancellation of their GST registration, and the physical copy of the said notice was never served upon them. In such circumstances, this Court is of the view that the impugned assessment order came to be passed without affording an opportunity of a personal hearing to the petitioner, thereby 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, despite the fact that there is 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 amount to 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.
8. 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. Therefore, this Court finds that there has been a lack of effort in applying the available opportunities to serve the notices/orders etc., effectively on the petitioner.
9. Further, it was submitted by the learned counsel for the petitioner that the petitioner has voluntarily cancelled their GST Registration. When such being the case, all the communications should have been sent to the e-mail id provided by the petitioner. However, the respondent had failed to do so. Under these circumstances, the impugned order came to be passed by the respondent without providing any opportunity of personal hearing, which is a clear violation of principles of natural justice.
10. That apart, now, the petitioner is willing to pay 20% of the disputed tax amount to the respondent. In such view of the matter, this Court is inclined to set aside the impugned order dated 19.08.2024 passed by the respondent. Accordingly, this Court passes the following order:-
(i) The impugned order dated 19.08.2024 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 20% of disputed tax amount to the respondent within a period of four weeks from the date of receipt of a copy of this order. The setting aside of the impugned order will take effect from the date of payment of the said amount.
(ii) The petitioner shall file their reply/objection along with the required documents, if any, within a period of three weeks from the date of payment of amount as stated above.
(iii) On filing of such reply/objection by the petitioner, the respondent shall consider the same and issue a 14 days clear notice, by fixing the date of personal hearing, to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
11. With the above directions, this writ petition is disposed of. No costs. Consequently, WMP.No.43319/2026 is ordered.
