Shree Shyam Trading Co. Vs Union of India (Patna High Court)
The Patna High Court has quashed an ex parte assessment order and subsequent demand against Shree Shyam Trading Co. for the Financial Year 2017-18, citing violations of natural justice and improper notice service under the Bihar Goods and Services Tax (BGST) Act, 2017. The ruling, delivered in the writ petition filed by the trading company, underscores the mandatory nature of personal hearings and valid notice dissemination by tax authorities.
Shree Shyam Trading Co. challenged the assessment order dated August 31, 2023, passed under Section 73(9) of the BGST Act, arguing that it was issued without granting any opportunity for a personal hearing as mandated by Section 75(4) of the Act. The petitioner further contended that no show cause notice or the assessment order itself was properly served through any valid mode as stipulated under Section 169 of the BGST Act. The company asserted that merely uploading notices under “Additional Notices and Orders” on the GST portal does not constitute valid service.
Conversely, the counsel for the respondents argued that the petitioner was given an option to appear in the notice, and their failure to do so negated their claim under Section 75(4). They also maintained that uploading proceedings on the portal complied with Section 169 of the GST Act.
Upon hearing both sides, the High Court sided with the petitioner. The court reiterated its consistent stance that authorities must strictly adhere to Section 75(4) of the GST Act regarding personal hearings. Examining the show cause notice dated March 14, 2023, the court found that the columns for “Date of personal hearing,” “Time of personal hearing,” and “Venue where personal hearing will be held” explicitly stated “NA.” This omission, the court observed, deprived the petitioner of the ability to choose a date, time, or venue for a hearing, thereby establishing a clear case of violation.
Furthermore, on the issue of notice service, the High Court ruled that simply uploading proceedings to the GST portal is insufficient to meet the requirements of Section 169 of the GST Act. The court reasoned that a registered company cannot be expected to peruse the portal daily to check for uploaded material information. It emphasized that official respondents are mandatorily required to comply with at least two modes of service mentioned in Section 169 of the GST Act, a requirement that was not met in this instance.
Consequently, the court set aside the impugned actions of the respondents. The competent authority has been directed to issue a fresh notice to Shree Shyam Trading Co., specifying the date, time, and venue for a personal hearing, with at least 15 days’ advance notice. The authority is then required to proceed strictly in accordance with the provisions of the GST Act, 2017. The entire exercise is to be completed within four months from the date of receipt of the court’s order, with the petitioner expected to cooperate.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
In the instant writ petition, the petitioner has prayed for the following relief(s):
“(a) For quashing the ex parte Assessment Order dated 31.08.2023 passed under Section 73(9) of the BGST Act, 2017 by the Respondent Assistant Commissioner of State Tax, Patna West Circle, Patna and subsequent demand raised in Form DRC 07 dated 31.08.2023 with respect to Financial Year 2017-18 as the same has been passed without granting any opportunity of hearing as contemplated under Section 75(4) of the BGST Act, 2017 and also without service of any notice, much less, show cause notice by any mode of service as contemplated under Section 169 of the BGST Act, 2017;
(b) For holding that passing of the ex parte impugned assessment order dated 31.08.2023 without granting an opportunity of hearing as contemplated under Section 75(4) of the BGST Act, 2017 is violative of principle of natural justice and the impugned assessment order is liable to be quashed;
(c) For holding that as the Petitioner Firm was not served with the purported show cause notices or the impugned ex parte assessment order by a valid mode of service as contemplated under Section 169 of the BGST Act, 2017, the same amounts to violation of principle of natural justice and the impugned order is liable to be quashed and set aside;
(d) For holding that mere uploading of Notices under the heading of ‘Additional Notices and Orders’ on the GST portal cannot be considered to be a valid mode of service of notices as required under Section 169 of the BGST Act, 2017;
(e) For holding that in the facts of the present case, the impugned assessment order dated 31.08.2023 is an ex parte order as the notices were never served upon the Petitioner firm in terms of Section 169 of the BGST Act, 2017 nor the Petitioner was granted an opportunity of hearing in terms of Section 75(4) of the BGST Act, 2017; and/or for any other relief(s) as Your Lordships may deem fit and proper in the facts of the present case and in the interest of justice.”
2. Learned counsel for the petitioner submitted that certain proceedings have been uploaded through Portal and it is contrary to Section 169 of the GST Act, 2017. Further, it is submitted that the petitioner is entitled to oral hearing in terms of Section 75(4) of the GST Act, 2017 and the same has not been provided to the petitioner. On this score itself, impugned actions of the respondents are liable to be set aside.
3. Per contra, learned counsel for the respondents resisted the aforementioned submission and submitted that in the notice the petitioner was given option for appearance and, therefore, he has not chosen to appear, resultantly, petitioner has not made out a case under Section 75(4) of the GST Act, 2017. It is further submitted that certain proceedings which have been initiated against the petitioner were uploaded in the Portal. Therefore, there is no violation of Section 169 of the GST Act, 2017.
4. Heard the learned counsel for the respective parties.
5. Time and again this Court has held that the concerned authority was required to strictly adhered to Section 75(4) of the GST Act, 2017 insofar as providing personal hearing. Reading of the show cause notice dated 14.03.2023, it is evident that against the column of Date of personal hearing, Time of personal hearing and Venue where personal hearing will be held, it is stated-NA. Therefore, petitioner cannot chose the date of personal hearing, time of personal hearing and so also the venue of personal hearing. On this count, the petitioner has made out a case. That apart, insofar as non-compliance to Section 169 of the GST Act, merely uploading the proceedings in a Portal would not suffice. In other words, every day Registered Company cannot peruse the Portal as to whether respondents have uploaded certain material information or not. Therefore, it is mandatory on the part of the official respondents to comply minimum two modes mentioned in Section 169 of the GST Act, 2017. On this count, the petitioner has made out a case so as to interfere with the impugned actions of the respondents.
Accordingly, they are set aside.
6. In the result, the competent authority, who has issued show cause notice, is hereby directed to fix a date of personal hearing, time of personal hearing and venue of personal hearing where the personal hearing would be held. Such notice shall be issued 15 days in advance to the petitioner. Thereafter, proceed strictly in accordance with the provisions of the GST Act, 2017. The above exercise shall be completed by the concerned authority within a period of four months from the date of receipt of a copy of this order. Petitioner shall co-operate with Respondents.
7. With the above observations, the instant writ petition stands allowed.
