Illness and Hidden Portal Notice Void GST Order: Delhi HC

Ruchika Industries Through Its Proprietor Rakesh Kumar Dhingra Vs Union of India And Ors (Delhi High Court)

The Delhi High Court has set aside an adverse tax order issued against Ruchika Industries under Section 73 of the Central Goods and Services Tax (CGST) Act, ruling that a combination of the show-cause notice (SCN) being uploaded to an obscure tab on the GST portal and the proprietor’s serious medical condition violated the principles of natural justice.

The judgment, in the case of Ruchika Industries Through Its Proprietor Rakesh Kumar Dhingra Vs Union of India And Ors, emphasizes the court’s priority in ensuring a fair opportunity to be heard, especially when a taxpayer presents genuine and compelling reasons for non-compliance.

Facts of the Case: Dual Reasons for Non-Response

Proprietor Rakesh Kumar Dhingra, representing Ruchika Industries, filed a writ petition challenging the adverse order dated August 24, 2024, arguing that he missed the opportunity to reply to the SCN dated May 29, 2024, for two primary reasons:

1. Obscure Portal Tab: The SCN was initially uploaded by the department to the “Additional Notices Tab” on the GST portal. This non-standard location meant the notice did not immediately come to the petitioner’s attention.

2. Medical Hardship: During the relevant period in 2023 and 2024, the proprietor was facing serious medical issues, including multiple hospitalizations, which, compounded by related stress, caused him to miss the opportunity to file a reply even after the notice may have become visible.

Despite the department issuing a reminder notice on July 15, 2024, no reply was filed, leading the Sales Tax Officer to pass the final demand order ex-parte (without hearing the taxpayer). The department argued that the petitioner’s continued filing of regular returns through this period negated the claim of missing the SCN.