Case Law Details
Ahs Steels Vs Commissioner of State Taxes And Another (Allahabad High Court)
In a notable decision, the Allahabad High Court ruled in favor of Ahs Steels in the case of Ahs Steels Vs Commissioner of State Taxes And Another, underscoring that the petitioner is not obligated to monitor the GST portal for show cause notices once GST registration is cancelled. The court emphasized that alternative service methods are required for any subsequent notices, reaffirming procedural requirements under the Uttar Pradesh Goods and Services Tax Act, 2017.
Background of the Case
The petitioner, Ahs Steels, challenged an order issued on December 26, 2023, by the Deputy Commissioner of State Tax, Sector-17, Ghaziabad, under Section 73 of the Uttar Pradesh GST Act. The dispute began when the company’s GST registration was cancelled on March 18, 2019. Following this cancellation, the business ceased operations, and the petitioner stopped regularly checking the GST portal.
In the months after cancellation, a show cause notice was reportedly uploaded to the GST portal. The petitioner, however, was not informed through any other means. When the petitioner became aware of the impugned order, it was alleged that proper procedural requirements for notification had not been followed, leading to a perceived violation of natural justice.
Key Legal Arguments
- Petitioner’s Stand: The petitioner argued that since the GST registration had been cancelled, they were under no obligation to monitor the GST portal for any notices. The counsel for Ahs Steels contended that the uploaded show cause notice, without any direct or alternative service, was inadequate. Relying on a prior Allahabad High Court ruling in M/s Katyal Industries v. State of U.P. and Others (Neutral Citation No. 2024: AHC: 23697-DB), the petitioner underscored the need for alternative notification methods, maintaining that the portal upload alone did not satisfy procedural fairness.
- Respondent’s Position: The state, represented by Additional Chief Standing Counsel Sri Nimai Das, argued in favor of the existing process, suggesting that uploading notices on the GST portal is a standard practice that ensures transparency and accessibility. However, there was no indication of any alternative measures taken to ensure the petitioner was aware of the notice.
Court’s Observations
After examining the arguments, the High Court found that the petitioner’s position held weight, especially in light of the principles outlined in previous cases. The court observed that once GST registration is cancelled, expecting regular checks on the GST portal by the taxpayer may be unreasonable, particularly when the business has ceased operations.
Justice reiterated that ensuring fair communication is essential under the principles of natural justice. The court noted, “Service of any show cause notice should, by necessity, include alternative methods when the usual means may not be feasible or applicable.” The bench further agreed with the M/s Katyal Industries precedent, which advocates for alternative notification channels when online portal notices might not suffice.
Decision and Order
In its judgment, the court quashed the order dated December 26, 2023, issued by the Deputy Commissioner under Section 73 of the Act. The court ruled that the show cause notice uploaded on the GST portal alone did not satisfy the requirement for proper notification. The court highlighted the importance of employing alternative methods for serving such notices to ensure the affected party is adequately informed, especially following registration cancellation.
The court granted liberty to the state tax authorities to reissue a properly served show cause notice using appropriate alternative means. The ruling emphasized that tax authorities are free to proceed in accordance with the law after ensuring due process in notification.
Legal Implications and Precedent
This judgment reaffirms the principles of natural justice, particularly in cases where taxpayers are not actively engaged in business or are otherwise unlikely to monitor official portals following GST registration cancellation. Legal experts suggest that this decision could impact administrative procedures for tax authorities, who may need to adopt broader service methods to avoid procedural challenges in similar cases.
This ruling by the Allahabad High Court highlights the court’s commitment to procedural fairness, underscoring that electronic notifications, while efficient, cannot replace the traditional requirement for effective service in all cases. Legal analysts view the decision as a reinforcement of taxpayer rights, mandating tax authorities to adopt a balanced approach in communication.
Conclusion
The Allahabad High Court’s decision in Ahs Steels Vs Commissioner of State Taxes And Another emphasizes that procedural justice remains central to GST and tax administration. With this ruling, the court has made clear that relying solely on portal-based notifications is insufficient once registration is cancelled, and alternative measures must be pursued to protect the rights of individuals and businesses under the law.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard counsel appearing on behalf of the petitioner and Sri Nimai Das, Additional Chief Standing Counsel appearing on behalf of the State.
2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner is aggrieved by the order dated December 26, 2023 passed by the respondent No.2/Deputy Commissioner, State Tax, Sector-17, Ghaziabad under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as “the Act”).
3. Factual matrix in the matter is that the petitioner’s registration under the Act was cancelled on March 18, 2019. Subsequent to the same, no business was carried out by the petitioner. It appears that a show cause notice was uploaded on the GST portal and subsequent to the same, the order impugned was passed under Section 73 of the Act.
4. Once the registration has been cancelled, the petitioner is not obligated to check GST portal. The mode of service of any show cause notice has to be by way of alternative means to the petitioner.
5. Counsel appearing on behalf of the petitioner relies upon an order passed by the coordinate Bench of this Court in M/s Katyal Industries v. State of U.P. and others, Neutral Citation No.2024:AHC:23697-DB. We are essentially in agreement with the said principle enunciated by the coordinate Bench in the said order.
6. We find that there has been violation of the principle of natural justice, and accordingly, the impugned order dated December 26, 2023 passed by the respondent No.2 is quashed and set aside. The department shall be at liberty to issue a proper notice to the petitioner and act in accordance with law.
With the above direction, the writ petition is disposed
Author Bio
