Jharkhand HC quashes GST Demand for Non-Upload on Portal & Improper Communication

Rahman Sales Vs State of Jharkhand (Jharkhand High Court)

Jharkhand High Court has quashed a demand order issued against Rahman Sales for the period 2017-18, citing a clear violation of natural justice principles due to the non-uploading of the order on the GST portal and a lack of proper communication to the petitioner.

The case originated from an inspection of Rahman Sales’ premises on December 1, 2018, conducted in the absence of the proprietor or his representative. Subsequently, a summary of an order in Form GST DRC-07, dated March 14, 2019, was issued, demanding tax, interest, and penalty. The petitioner, Rahman Sales, contended that they never received the mandatory pre-show cause notice in Form GST DRC-01 online. Furthermore, they argued that the DRC-07 order was issued with an invalid reference number and was never properly uploaded to the GST portal.

Rahman Sales maintained that despite receiving an email on March 14, 2019, instructing them to access their dashboard for the order, the DRC-07 order itself was not attached to the email, nor was it available on the portal. The business stated it could not appear before the authorities earlier due to a family ailment.

The respondents, representing the tax authorities, acknowledged a “technical glitch” causing a delay in uploading Form DRC-07. However, the High Court noted that the counter-affidavit filed by the respondents failed to specify when the order was actually uploaded and made available for the petitioner to download. The docket sheet for March 14, 2019, also indicated that the DRC-07 was not uploaded on the same day it was issued.

Judicial Precedent and Natural Justice

The High Court’s decision strongly emphasizes the fundamental principles of natural justice, particularly the “right to be heard” (audi alteram partem) and the requirement for due process. In Indian jurisprudence, proper communication of an order that carries civil consequences for an individual or entity is paramount. Without proper communication, the affected party is deprived of the opportunity to understand the charges, present their defense, or file an appeal, thereby rendering the entire proceeding unfair.

Courts across India, including the Supreme Court in cases like Canara Bank v. V.K. Awasthy (2005), have consistently held that notice and a fair opportunity to make a representation are essential components of natural justice. The duty to communicate an order effectively ensures that the recipient has actual knowledge of the decision and its implications. In the context of online portals, merely stating that an order was “uploaded” is insufficient if it was not genuinely accessible to the taxpayer at the relevant time, especially when previous communications were also allegedly absent. This ensures transparency and allows the affected party to exercise their legal rights, such as filing objections or appeals.

Ruling

Based on the evidence, the High Court concluded that there was a clear violation of natural justice due to the non-supply of the demand order.

Consequently, the Jharkhand High Court allowed the writ petition, setting aside the demand order in Form GST DRC-07 dated March 14, 2019, and all subsequent proceedings. The matter has been remitted back to the fourth respondent (the concerned tax authority) with a directive to:

1. Supply a copy of the order to Rahman Sales.

2. Provide a fresh hearing to the petitioner.

3. Pass an appropriate order in accordance with the law.

4. Properly communicate the new order to the petitioner.

This ruling reiterates the critical need for tax authorities to ensure proper communication and adherence to procedural fairness in all their actions.

FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT

In this writ petition, the petitioner has assailed the order as contained in Form GST DRC-07 dated 14.03.2019 pertaining to the period 2017-18, Form GST DRC-01 dated 10.12.2018 and also for quashing certain proceedings initiated subsequent to the inspection done on 01.12.2018 made in the premises of the petitioner in his absence.

2. It is the specific contention of the petitioner in the writ petition that after an inspection was done on the premises of the petitioner on 01.12.2018 pursuant to an order dated 29.11.2018, an inspection report was prepared allegedly, but at the time of inspection, the petitioner or his representative was not present; and the petitioner was directed to appear before the 4^th respondent with records.

3. The petitioner contends that he could not appear before the authority because of the ailment in his family and he was served with summary of an order in Form GST DRC-07 for the period July 2017 to March 2018 demanding tax, interest and penalty. The petitioner contends that before issuance of DRC-07, it did not receive any DRC-01 online. The petitioner further contends that issuance of pre-show cause notice in Form GST DRC-01A is mandatory under Section 73(1) of the Jharkhand Goods and Services Tax, 2017 (in short “JGST Act, 2017”). He also contends that DRC-07 was issued on 14.03.2019 at a reference number which was an invalid reference number.

4. It is further contended that according to the docket sheet maintained by the 4^th respondent, DRC-07 was uploaded online, but due to technical error, there was a delay in such uploading.

5. Learned counsel for the petitioner also pointed out that an e-mail was issued to him on 14.03.2019, the date on which Form GST DRC-07 was issued asking the petitioner to access his dashboard on the portal to view/downloads/print the order, but there was no attachment of the DRC-07 order to that e-mail and that the same was not ever uploaded on the portal.

6. Though counsel for the respondents sought to contend that there was a delay in uploading Form DRC-07 on account of a technical glitch, the counter affidavit filed by the respondents does not show when actually the same was uploaded so that the petitioner may download the same.

7. It is only stated by respondents that DRC-07 along with adjudication order has been passed/issued by following the provisions and procedures as enshrined in the JGST Act, 2017, but nowhere it is stated that the said order has been uploaded on the portal and was available on the date of its passing on 14.03.2019.

8. It is the duty of the respondents, who have passed the order, to upload it on the portal or communicate it to the petitioner otherwise on the petitioner’s e-mail. In the light of the docket proceedings dated 14.03.2019 of the 4^th respondent which indicates that DRC-07 was not uploaded on the very same day and in absence of any statement by the respondents as to when it was actually uploaded, it has to be held that there has been violation of the principles of natural justice on account of non-supply of the said order.

9. Therefore, the writ petition is allowed.

10. The order as contained in Form GST DRC-07 dated 14.03.2019 and the consequential proceedings are set-aside and the matter is remitted back to the 4^th respondent to supply a copy of the same to the petitioner, provide a hearing to the petitioner and then pass an appropriate order in accordance with law and communicate to the petitioner.