Tvl. Jayam Sai Concrete Works Vs State Tax Officer Investigation Gr-I (Madras High Court)
GST Notice merely on GST Portal not Sufficient for making Assessment Order: Madras HC Sets Aside Assessment Order
Introduction:
The concept of notice in legal proceedings is integral to ensuring due process and the protection of an individual’s right to a fair hearing. Under the principle of audi alteram partem, it is a fundamental requirement that an aggrieved party is given adequate notice of the proceedings that may affect their legal rights or interests. Failure to provide proper notice can render the proceedings void or lead to a violation of natural justice, as it deprives the individual of an opportunity to be heard and to defend their case.
In the recent judicial precedent, Tvl. Jayam Sai Concrete Works v. State Tax Officer Investigation Gr-I [2025] 170 taxmann.com 563 (Madras), concerning the validity of an assessment order when the petitioner was not properly served with reminder notices for a personal hearing was discussed. The court’s ruling emphasizes the importance of proper service of notices and adherence to procedural fairness under GST framework.
Facts of the Case:
1. The petitioner, Tvl. Jayam Sai Concrete Works, a wholesaler and distributor of cement, was found with discrepancies during a GST audit for FY 2019-2020, including non-filing of returns, non-payment of tax under Reverse Charge Mechanism (RCM) for freight charges, and failure to generate outward e-way bills. A notice was issued on April 23, 2024, demanding tax payment and penalty.
2. The petitioner claimed to have already paid the tax and penalty, except for the e-way bill discrepancy. Despite filing a reply on June 5, 2024, the petitioner did not attend the personal hearing, as the reminder notices were only uploaded on the GST portal and not physically served. The assessment order was subsequently passed.
Legal Issues:
- Whether the mere uploading of notices on the GST portal without proper physical service constitutes adequate service of notice.
- Whether the failure to serve notices properly renders the subsequent assessment order invalid.
- The extent of adherence to principles of natural justice and fair opportunity of hearing.
Arguments of the Petitioner:
- The petitioner argued that the three reminder notices were not served by tender or RPAD. Instead, they were only uploaded on the GST portal, which resulted in the petitioner being unaware of the proceedings.
- Due to lack of proper notice, the petitioner was unable to participate in the adjudication proceedings and present their case.
- The petitioner expressed willingness to pay 25% of the disputed tax and requested a final opportunity to present objections.
- The petitioner maintained that they had already paid the tax and penalty before the issuance of the notice, except for the defect regarding the non-generation of outward e-way bills.
Verdict of the Hon’ble High Court of Madras:
1. The court noted that the reminder notices for a personal hearing were only uploaded on the GST portal under the “Additional Notices and Orders” tab, instead of being properly served via tender or Registered Post with Acknowledgement Due (RPAD). This method of service was deemed insufficient, rendering the petitioner unaware of the proceedings and unable to participate in the adjudication. The court emphasized that mere uploading of notices on the portal does not constitute proper service.
2. The court ruled that the petitioner must be given an opportunity to present their objections.
3. The impugned assessment order was set aside on the ground of principle of natural justice.
Conclusion:
