GST Proceedings Valid Even if Order Not on uploaded Portal: Calcutta HC

Messers Sreema Rice Mill Vs Union of India & Ors. (Calcutta High Court)

Summary: In Messers Sreema Rice Mill v. Union of India, the Calcutta High Court ruled that GST proceedings are not invalidated simply because a Show Cause Notice (SCN) and adjudication order were not uploaded on the GST common portal, as long as alternative statutory methods of service, as provided under Section 169 of the Central Goods and Services Tax Act (CGST Act), are followed. The case arose when Messers Sreema Rice Mill argued that the non-uploading of these documents on the common portal denied them the right to appeal. The court noted that the SCN was duly served by speed post and that the petitioner responded and attended a personal hearing. Thus, it concluded that there was substantial compliance with the CGST Act’s notice service requirements. The court further addressed the petitioner’s right to appeal, stating that while the SCN’s non-uploading on the portal did not vitiate the proceedings, the final adjudication order must be uploaded to allow the taxpayer to file an appeal. It directed that the order should be uploaded within seven days, allowing the petitioner three months from the date of the portal upload to file an appeal. This judgment clarifies the importance of digital uploads for appeal rights under GST, while affirming that alternate service methods suffice for initial notices.

Introduction: The Hon’ble Calcutta High Court, in the case of Messers Sreema Rice Mill v. Union of India [Writ Petition Application No.11892 of 2024 dated July 02, 2024], held that proceedings are not invalid if the Show Cause Notice (“SCN”) is not uploaded on the common portal and served by other means specified in Section 169 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). However, the adjudication order must be uploaded on the common portal to allow the Assessee to file an appeal. Hence, the writ petition was disposed of.

Facts:

Messers Sreema Rice Mill (“the Petitioner”) were issued a SCN dated September 21, 2023 was issued against the Petitioner for the tax period July 2017 to March 2018 under Section 73 of the CGST Act in Form DRC-01.

Both SCN and the adjudication order dated December 29, 2023 (“the Impugned Order”) issued under Section 73(9) of the CGST Act in Form DRC-07 were not uploaded on the common portal.

Consequently, not uploading the Impugned Order on the portal had denied the statutory power of the Petitioner to file an appeal under Section 107 of the CGST Act before the Appellate Authority.

However, the Respondent stated that the SCN was served through the speed post and the Petitioner had not only responded to the SCN dated October 10, 2023 but had also availed the opportunity of the personal hearing on November 20, 2023.

Hence, aggrieved by the Impugned Order, the Petitioner had filed the writ petition before the Hon’ble High Court.

Issue:

Whether the proceedings can be vitiated if the Order is not uploaded on the common portal?

Held:

• Observed that, the SCN was served through the speed post, and the Petitioner had responded to the SCN had also availed the opportunity of the personal hearing, which constitutes the substantial compliance of the statutory provisions with respect to the service of the notice and the failure to upload the SCN on the common portal does not invalidate the proceedings.
• Further held that, the Impugned Order passed under Section 73(9) of the CGST Act has been uploaded on the common portal dated May 20, 2024 and the Petitioner should be granted the opportunity to exercise its statutory right to file the appeal. Further, the Respondent should upload the order within 7 days from the order date on the common portal.
• Held that, the Petitioner should file an appeal within three months, from the date of passing the judgement and order or within three months from the date of uploading the order on the common portal whichever is later, by depositing the requisite fees required for maintaining the appeal under Section 107 of the CGST Act and the appeal shall be heard and disposed of on the merits by the Appellate Authority, upon giving an opportunity of personal hearing to the Petitioner. Hence, the writ petition was disposed of.

Our Comments:

Section 169 of the CGST Act governs “Service of notice in certain circumstances”. Section 169(1) of the CGST Act provides that any decision, order, summons, notice or other communication under the CGST Act or the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) made thereunder shall be served by any one of the following methods, namely:

1. by giving or tendering it directly or by a messenger including a courier to the addressee or the taxable person or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxable person; or

2. by registered post or speed post or courier with acknowledgement due, to the person for whom it is intended or his authorised representative, if any, at his last known place of business or residence; or

3. by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or

4. by making it available on the common portal; or

5. by publication in a newspaper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain; or

6. if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence and if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the office of the concerned officer or authority who or which passed such decision or order or issued such summons or notice.

The Gujarat High Court, in the case of Britannia Industries Limited vs. Union of India [TS-382-HC(GUJ)-2023-GST] was dealing with the question of as to whether the petitioners were “prevented from filing their appeals through the electronic mode merely because the orders were not uploaded, when it is undisputed that the petitioners otherwise were communicated the orders and had received the same manually.” The Court noted that a perusal of Section 107 indicates that any person aggrieved by any decision or order passed under the CSST Act may appeal to the Appellate Authority, as may be prescribed, within three months from the date on which the said decision or order is “communicated” to the person and the same has no correlation with the additional event of date of uploading of the same on the GST portal, even though the same is mandated in terms of Section 142(5) of the CGST Rules. In holding so, the High Court relied on the ratio laid down by the Bombay High Court in the case of Meritas Hotels Pvt.Ltd v. State of Maharashtra and Ors. reported in [TS-675-HC(BOM)-2021-GST] which inter alia held that “having regard to the express provisions of sub-Section (1) and (4) of Section 107 of the CGST Act, we have no manner of doubt, that for the purpose of limitation, the date of communication of the impugned assessment order is to be regarded as April 20, 2019 viz the date on which the order was sent by email to the petitioner…. we do not find any force in the contention of learned counsel for the petitioner, that the date of uploading of the impugned assessment order on the GSTN portal has to be regarded as the date of communication for the purpose of calculating limitation”. On the other hand, there are other decisions, including in the case of Gujarat State Petronet vs. Union of India [TS-730-HC-2020(GUJ)-NT] and Jose Joseph vs. Assistant Commissioner of Central Tax and Central Excise & ors. [W.P.(C) Nos. 8960, 8966, 8977 & 9052 of 2021], which contrarily hold that such limitation period would commence only from the date of uploading of the order on the GST portal, for the reason that, during the relevant period, appeal could not have been filed other than electronically and unless such order was so uploaded.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. The present writ petition has been filed, inter alia, challenging the order dated 29^th December, 2023 passed under Section 73(9) of the West Bengal/Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “said Act”), for the tax period July 2017 to March, 2018.

2. The petitioner contends that it is the petitioner’s case that neither the show cause cum demand notice dated 21st September, 2023 issued under Section 73 of the said Act in DRC-01 nor the adjudication order dated 29^th December, 2023 passed by the proper officer issued under Section 73(9) of the said Act in form DRC-07 was uploaded on the common portal.

3. Dasgupta, learned advocate representing the petitioner by placing reliance on a communication dated 23^rd November, 2023 issued by the Principal Commissioner GST submits that it is the obligation of the proper officer prior to passing an adjudication order under Section 73(9) of the said Act to issue a show cause notice under Section 73(1) of the said Act and to upload the same in Form DRC-01 on the common portal.

4. Admittedly, in this case the show-cause notice in Form DRC-01 had not been uploaded in the common portal. He submits that the respondents by not uploading the adjudication order in Form DRC-07 dated 29^th December, 2023 has also denied the petitioner the right to challenge the same by filing an appeal. Right to prefer an appeal is a statutory right which cannot be taken away.

5. In the circumstance, as aforesaid, it is submitted that this Hon’ble Court may be pleased to set aside not only the adjudication order passed under Section 73(9) of the said Act dated 29^th December, 2023 but also the show cause notice dated 21^st September, 2023, issued under Section 73(1) of the said Act.

6. Banerjee, learned advocate representing the respondents on the other hand by referring to the order dated 29^th December, 2023 submits that although, the show cause cum demand notice dated 21st September, 2023 was not uploaded on the common portal due to the technical reasons, yet in terms of the provisions contained in Section 169 of the said Act, the show-cause notice had been served on the petitioner through speed post. The petitioner in response to the said show cause notice not only filed its reply on 10^th October, 2023 but also availed the opportunity of personal hearing on 20^th November, 2023. Having regard to the aforesaid it is submitted that mere non-uploading of a show cause notice on the common portal does not have the effect of vitiating the entire proceeding, especially when the said show cause notice was duly served on the petitioner and the petitioner had also responded to the same.

7. Banerjee, by placing a print out of copy of e-mail communication dated 20^th May, 2024 which is taken on record, submits that the order in DRC 07 has been uploaded on the portal on 20t^h May, 2024. Having regard to the aforesaid, it is submitted that in the light of the order dated 29^th December, 2023 in Form DRC-07 being uploaded, there cannot be any difficulty on the part of the petitioner to prefer an appeal.

8. Dasgupta, in response, submits that to the petitioner’s knowledge, the order dated 29^th December, 2023 in form DRC-07 is yet to be uploaded.

9. Heard the learned advocates appearing for the respective parties and considered the materials on record. In the instant case it would be apparent from the records that the show cause notice dated 21^st September, 2023 in DRC-01 for the tax period July, 2017 to March, 2018 was not uploaded in the common portal. As correctly pointed out by Mr. Dasgupta, the Rule 142(1) of the West Bengal Goods and Services Tax Rules 2017 (hereinafter referred to as the “said Rules”) read with Rule 142(5) of the said Rules requires not only the show-cause notice but also the adjudication order to be uploaded in forms DRC-01 and DRC-07 respectively on the common portal. According to Mr. Dasgupta, unless the aforesaid show cause notice and the adjudication order are uploaded on the common portal, no effect can be given thereto.

10. It is true, that in absence of the registered tax payer being made aware with regard to the show cause in the manner provided in Rule 142(1) of the said Rules, the registered tax payer may be denude the opportunity to appropriately respond to the same. But in the instant case, it is noticed that the show cause notice was duly served on the petitioner by speed post. The petitioner had also responded to the same and was also afforded an opportunity of personal hearing. It may be relevant to note that Section 169 of the said Act specifies that the notices are required to be served in the mode and manner as provided for therein. I find that one of the modes for service of notice is to make the same available on common portal while one of the other modes for service is by registered/speed post. Admittedly, since, the petitioner had been served with the show-cause notice by speed post and the petitioner having responded to the same, the above in my view, constitutes substantial compliance of statutory provision as regards service of notice. Having regard to the above, the show-cause notice or the order does not get vitiated simply because the same had not been uploaded on the common portal. Mr. Dasgupta, learned advocate representing the petitioner could not identify any prejudice caused to the petitioner for reasons of the show cause notice not being uploaded on the common portal. Insofar as, the adjudication order dated 29t^h December, 2023 issued under Section 73(9) of the said Act is concerned, I must say that in absence of such disclosure, the petitioner could not have challenged the same by preferring an appeal. Since today, at the time of hearing by placing reliance on the communication dated 20^th May, 2024, it has been submitted that the order passed under Section 73(9) of the said Act dated 29t^h December, 2023 has been uploaded on the common portal only on 20t^h May, 2024, I am of the view that the petitioner should be permitted to pursue its statutory remedy. If, however, for any reason the said order is yet to be uploaded, the respondents should forthwith upload the same on the portal positively within a period of 7 days from date.

11. In the event, the petitioner files an appeal from the aforesaid order within a period of three months, from the date of passing of this judgment and order or within three months from the date of uploading the order on the common portal whichever is later, by depositing requisite fees as is required for maintaining the appeal under Section 107 of the said Act, such appeal shall be heard and disposed of on merits by the appellate authority, upon giving an opportunity of personal hearing to the petitioner.

12. It is made clear that this Court has not gone into the merits of the matter. It would be open to the appellate authority to decide all points as may be raised by the petitioner, including the point of limitation, if any.

13. With the above observations and directions, the writ petition stands disposed of.

14. There shall be no order as to costs.

15. Urgent Photostat certified copy of this order, if applied for, be made available to the parties upon compliance of requisite formalities.

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