Mandatory Service of GST Notices: Much required Amendment in Section 169

Section 169 of the GST Act currently provides six alternative methods for serving official communications like notices, orders, or summons, granting the issuing officer the discretion to choose any single mode, including digital methods like the common portal or email, or physical methods. This discretionary approach often leads to taxpayers missing communications, particularly those sent only through the portal or unmonitored emails, resulting in non-participation in adjudication proceedings and the subsequent issuance of ex-parte demand orders. To ensure taxpayers receive adequate opportunity to represent their cases and mitigate the hardship caused by unexpected ex-parte demands, an amendment is proposed to mandate service via registered post or speed post with acknowledgment due as a compulsory mode, which must be used in addition to any one of the other specified methods. This change aims to address the practical reality that many taxpayers do not constantly monitor digital channels for official notices, thereby protecting their rights and reducing the need for writ petitions against recovery actions.

Section 169 of the Act: — Current Provision:-

Section 169 reads as “Section 169. Service of notice in certain circumstances.-

(1) Any decision, order, summons, notice or other communication under this Act or the rules made thereunder shall be served by any one of the following methods, namely:-

(a) 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

(b) 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

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

(d) by making it available on the common portal; or

(e) 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

(f) 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”.

A much needed amendment after eight years of enacment of GST Act is higly required by way of making suitable amendment in section 169 so as to make clause (b) of sub-section 1 of section 169, a compulsory mode of service of any decision, order, summons, notice or other communication under the GST Act or the GST Rules made thereunder along with any other mode as specified in the said section so that the tax payers are given sufficient proper opportunity to represent their case and no ex-parte order is passed for the sole reason of non-participation in the adjudication proceedings.

The proposed amended section may be re-framed as:-

Section 169. Service of notice in certain circumstances.-

(1) Any decision, order, summons, notice or other communication under this Act or the rules made thereunder shall be served 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; and through any one of the following methods, namely:-

(a) 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

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

(c) by making it available on the common portal; or

(d) 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

(e) 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”.

Reasoning:-

The GST Act requires the tax payers to file their GST returns and to participate in the adjudication proceedings through the GST online portal.

For filing returns, tax payers seek services of return preparer who regularly keep their clients informed about the due dates and other compliances.

But for adjudication, it is not possible for the return preparers to check, the online portal time and again, to see whether any proceeding have been initiated by the GST Department.

Section 169 specifies altogether six (6) alternative modes of service of any decision, order, summons, notice or other communication under the GST Act or the GST Rules made thereunder and it is totally left upon the discretion of the Proper Officer to choose the mode through which the aforesaid communications be made with the tax payers.

It is a common practice by the Proper Officers to issue notices either onto the portal (mostly under the tab View Additional Notices and Orders) or through e-mail, which often goes un-noticed. And it is a fact, that the tax payers cannot be expected to regularly check their email or online portal to see if any notice has been issued to them.

This often leads to non-participation in the adjudication proceedings for the sole reason of having no knowledge of initiation or commencement of proceedings and resulting in passing of ex-parte orders raising huge demand of tax, interest and penalty, more so in such cases where no such demand could be raised based on the merits of the case but as the tax payer failed to participate in the proceedings and present the case on merits, he is subjected to undue hardship and mental harassment.

Passing of such illegal ex-parte demand order by the department is violation of the fundamental rights of the tax payers granted under Article 14 and Article 19(1)(g) of the Constitution of India and further issuing garnishee notices or such other steps for recovery of demand again violates Article 265 and 300A of the Constitution of India and the tax payer is left with no other option but to file an appropriate Writ Petition under Article 226 of the Constitution of India before the Hon’ble Jurisdictional High Court to seek relief.

This amendment will certainly bring relief to a large number of tax payers as it is a fact that majority of business dealings are still conducted in the traditional form without intensive use of digital medium for communication resulting in failure to give appropriate reply at appropriate time to such communications issued by GST department.

Annexure: 

Table summarizing the current provision, proposed amendment, and reasoning for the much-needed amendment in Section 169 of the GST Act: