Pioneer Products Vs State Tax Officer (Madras High Court)
Madras High Court has intervened in a Goods and Services Tax (GST) assessment dispute, ruling that tax authorities must send at least one reminder notice via Registered Post with Acknowledgement Due (RPAD) before issuing an ex-parte order. The judgment came in the case of Pioneer Products Vs State Tax Officer, addressing concerns over adherence to natural justice principles in the digital age.
The petitioner, Pioneer Products, challenged an assessment order dated January 9, 2025, issued by the first respondent. The core of the petitioner’s argument was a lack of awareness regarding critical notices. According to the petitioner’s counsel, Mr. J. Madhusuthanan, both DRC 01 (show cause notice) and subsequent personal hearing notices were uploaded exclusively to the “Additional Notices and Orders” section of the GST Portal. This specific placement, rather than the more prominent “Notices and Orders” tab, allegedly prevented the petitioner from becoming aware of the proceedings, leading to their inability to file a reply or attend personal hearings. Consequently, an ex-parte order was passed without their participation. The petitioner contended that this constituted a clear violation of natural justice.
The petitioner expressed a willingness to deposit 25% of the disputed tax amount, provided the impugned order was set aside and the matter remanded for fresh consideration. This offer aimed to facilitate a re-evaluation of their case.
Mrs. P. Selvi, the learned Government Advocate representing the respondents, acknowledged that the notices were indeed uploaded to the e-portal and that the petitioner had failed to appear for two scheduled personal hearings. However, she fairly conceded to the petitioner’s request for a fresh consideration, given their voluntary offer to deposit a portion of the disputed tax.
Upon reviewing the submissions and available records, the Court, presided over by a single judge, observed that all notices—DRC 01 issued on November 26, 2024, and personal hearing notices on December 19, 2024, and January 3, 2025—were solely uploaded to the e-portal. Crucially, none of these notices were served via RPAD.
The Court emphasized that when an ex-parte order is to be passed, the respondent authority ought to have dispatched at least one reminder notice through RPAD or via any other prescribed mode under Section 169 of the GST Act. This measure, the Court reasoned, would enable the petitioner to file a proper reply and participate in the proceedings, upholding the tenets of fair hearing. While the judgment did not explicitly reference a specific judicial precedent, the Court’s opinion establishes a clear procedural expectation for ensuring due process.
Considering the petitioner’s proactive offer to deposit 25% of the disputed tax, and the respondent’s agreement, the High Court proceeded to set aside the impugned order dated January 9, 2025. The matter has been remanded to the first respondent for fresh consideration. As part of the directives, the petitioner has been granted a period of three weeks from the receipt of the order to deposit the 25% disputed tax. Following the deposit, the petitioner must file a comprehensive reply with supporting documents within two weeks. Subsequently, the respondent is mandated to consider the reply and issue a clear 14-day notice, affording the petitioner a fresh opportunity for a personal hearing. The writ petition was allowed on these terms, and connected miscellaneous petitions were closed without costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Heard Mr.J.Madhusuthanan, learned counsel appearing for the petitioner and Mrs.P.Selvi, learned Government Advocate who takes notice on behalf of the respondents.
2. By consent of both the parties, this Writ Petition is taken up for final disposal at the stage of admission itself.
3. The challenge is made against the impugned assessment order dated 09.01.2025 passed by the first respondent.
4. The learned counsel for the petitioner would submit that, in the present case, DRC 01 and personal hearing notices were issued to the petitioner and the same were uploaded in the column of “Additional Notices and Orders” in GST Portal. Due to non-uploading of the Notices and Orders in the regular “Notices and Orders” tab in the portal, the petitioner was not aware of the same, hence, the petitioner did not file his reply and appear for personal hearing, however, without hearing him, the impugned order came to be passed. Hence, the learned counsel would submit that, the impugned order suffers from violation of principles of natural justice, hence, it is liable to be set aside.
5. Further, the learned counsel would submit that, the petitioner is ready and willing to deposit 25% of the disputed tax, in the event, this Court set aside the impugned order and remand the matter back to the Authority for fresh consideration. Hence, he prays for appropriate orders.
6. The Learned Government Advocate appearing for the respondents would submit that, in the present case, the impugned notices and orders were duly uploaded in the e-portal, but the petitioner did not appear before the respondent on two personal hearings. However, the Learned Government Advocate would fairly submit that, since the petitioner has voluntarily come forward to deposit 25% of the disputed tax, the prayer sought for by the petitioner may be considered.
7. I have given due consideration to the submissions made on either side and perused the materials available on record.
8. In the present case, DRC 01 was issued on 26.11.2024 and two personal hearing notices were issued on 19.12.2024 and 03.01.2025 respectively. All the notices were uploaded only in the e-portal and none of the notices were served through RPAD.
9. This Court is of the considered opinion that, when an exparte order was passed, the respondent should have sent atleast one reminder notice through RPAD or by way of any other mode as specified under Section 169 of the Act. So that, the petitioner can able to file his reply or participate in the proceedings. In the present case, no notice was served by the respondent through RPAD and all the notices were uploaded only in the e-portal. However, since the petitioner, themselves, have voluntarily come forward to deposit 25% of the disputed tax, to which, the Learned Government Advocate is also agreeable, this Court is inclined to pass/issue the following orders/directions:-
i) The impugned order dated 09.01.2025 passed by the 1st respondent is set aside.
ii) Consequently, the matter is remanded to the 1st respondent for fresh consideration.
iii) The petitioner is granted liberty to deposit 25% of the disputed tax, which the petitioner themselves have voluntarily come forward to make such payment, within a period of three weeks from the date of receipt of a copy of this order.
iv) Upon making of such deposit, the petitioner shall file a reply along with supportive documents within a period of two weeks, and
v) Thereupon, the respondent shall consider the reply and shall issue a clear 14 days notice affording an opportunity of personal hearing
10. In the result, this Writ Petition is allowed on the aforesaid terms. Consequently, connected miscellaneous petitions are closed. No costs.
