Recently in Writ Petition filed before the Hon’ble High Court of Madhya Pradesh in the case of M/s Shri Shyam Baba Edible Oils vs The Chief Commissioner and another (W.P. No. 16131/2020) a grievance was placed by the Petitioner that a Show Cause Notice for proceedings under Section 74 of the CGST Act 2017 (Act) was not communicated to them at all and thus the question of natural justice and violation of provisions of Rule 142 of the CGST Rules 2017 was raised.
Interestingly, the court was appraised by the revenue (CGST department) that Show Cause Notice was in fact duly communicated to the petitioner’s registered email id and in-spite of the same, no reply to the SCN was given. However after bare perusal of the provisions of Rule 142(1) of the CGST Rules 2017 which specifies that “summary of SCN” is required to be served in the specified format (i.e. DRC-01) “electronically”, the Court concluded that the only mode prescribed for communicating the show-cause notice/order is by way of uploading the same on “website of the revenue”. Hence, on the basis of above reasoning, it was concluded in given case that procedure laid down in Rule 142 of the Rules has not been followed and thus the SCN issued was struck down.
Though the given judgment brought a sigh of relief for the taxpayer, it however did not answer a very critical question that “which website should be treated as website of revenue?”. On the face of it, this question may appear to be straight forward with only one common answer i.e. common portal as specified under Section 146 of the Act. Further it may also give an impression that the common portal for given purpose i.e. service of SCN and Orders for proceedings under Section 73, 74 or even 129 is www.gst.gov.in. But when one makes an endeavour to read certain sections along with the notifications issued in this regard, the obvious question throws up “not too obvious answers”, which are confusing.
Rule 142(1) has been issued under Chapter 18 of the CGST Rules 2017 titled as “Demand and Recovery”. Further the power to make rules flows from Section 164 of the Act with basic intention to carry out the provisions of the law. Thus in order to carry out the provisions of Chapter 15 of the Act titled as “Demand and Recovery” only, the given rule has been framed. The provisions regarding issuance of SCN and Order in Rule 142 is read as under
RULE 142. Notice and order for demand of amounts payable under the Act. —
(1) The proper officer shall serve, along with the
(a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01,
(5) A summary of the order issued under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 75 or section 76 or section 122 or section123 or section 124 or section 125 or section 127 or section 129 or section 130 shall be uploaded electronically in FORM GST DRC-07*, specifying therein the amount of tax, interest and penalty payable by the person chargeable with tax.
On a closer reading of sub-rule (1) and sub-rule (5) it can be noted that for service of summary of SCN the rule uses the words “shall serve electronically” whereas for service of summary of Order it uses the words “shall be uploaded electronically”. Hence the different usage of words for different documents i.e. “serve” and “uploaded” indicate difference in scope of manner in which summary of SCN and/or order can be communicated to the assessee. Further the methods of communication of notices or orders has actually been given in the law itself under Section 169 of the Act. The said section has not been discussed at all in the judgment but holds greater relevance for the question which has been raised by the authors.
The said Section 169 under clause (1)(c) and 1(d) brings out two methods on the basis of which the electronic delivery of the notices or orders etc has been specified. The relevant extracts are as under
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 :—
(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
The given provision is applicable for all types of decisions, orders, summons, notices and other communications to be made under the Act to the assessee. Now, in this context, it appears that the answer to the question i.e. “website of revenue” as specified by the Hon’ble Court in its order (supra) is common portal. In fact otherwise also, with advent of GST, the common portal has been treated as backbone for the successful implementation for the provisions of the Act and rules made there under. It has served as single interface for all GST related compliances. Hence at this point it would be safe to agree that if the SCN, Orders etc are uploaded on the common portal then it should be treated as valid compliance of the provisions of Rule 142 read with Section 169(1)(d) above.
Interestingly, the term common portal has been defined under Section 2(26) of the Act which is read as under
(26) “common portal” means the common goods and services tax electronic portal referred to in section 146;
Hence in light of above, the provisions of Section 146 of the Act hold greater relevance to understand the inclusions, exclusions and usage of common portal as envisaged in the law.
The provisions of Section 146 of the Act are read as under
SECTION 146. Common Portal. — The Government may, on the recommendations of the Council, notify the Common Goods and Services Tax Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, electronic way bill and for carrying out such other functions and for such purposes as may be prescribed.
On minute reading of the provisions of Section 146 of the Act, it comes out that the common portal needs to be notified by issuing a notification and same can be done for facilitating specific functions of
– Payment of tax,
– Furnishing of returns,
– Computation and settlement of integrated tax,
– Electronic way bill
– Such other functions and purposes as may be prescribed
Taking power from Section 146, up till now, relevant notification issued under said section are:
|Notification No||Purpose||Website Address|
|04/2017-CT, dt. 19-06-2017 read with 9/2018-CT dt. 23-1-2018||For facilitating registration, payment of tax, furnishing of returns and computation and settlement of integrated
|9/2018-CT dt. 23-1-2018||Furnishing electronic way bill.||www.ewaybillgst.gov.in|
|69/2019-CT dt. 13-12-2019||Preparation of the invoice in terms of sub-rule(4) of rule 48||(i) www.einvoice1.gst.gov.in;
No other notification has been issued under Section 146 of the Act till now. It means that service of notice, order, summon or any other communication under Section 169(1)(d) cannot be done on “GSTN” or “www.gst.gov.in” until same is notified under Section 146 for the purpose of carrying out provisions of Section 169(1)(d).
In fact as it stands today, the assessee has more than 1 common portals (supra) to its access with different login credentials for different purposes. But none of them are notified for the purpose of service of documents as specified under Section 169 of the Act.
Hence even in the background of the aforesaid judgment delivered by the Hon’ble MP High Court, the revenue has been asked to follow the procedure as given under Rule 142 of the Act and issue a fresh SCN. If in given case, the revenue assumes that www.gst.gov.in is the “website of the revenue” (as mentioned by the Hon’ble Court) in its judgment or treats it as common portal for purpose of Section 169 read with Rule 142, then also, the petitioner can come forward and argue that procedure laid down under Rule 142 has not been followed because www.gst.gov.in is neither the common portal for given purpose nor it is the website of revenue for uploading of notices.
In fact till the time a notification with retrospective effect is not issued under Section 146 of the Act for given purpose, all the proceedings up till now undertaken by the revenue across India under various sections of demand and recovery or even for interception of the vehicle during movement are incorrect and violative of the procedure and manner laid down through the Act. In the light of given High Court judgement and also due to lethargic approach of the
Government, a sharper, heavier and a legally backed argument to quash all the proceedings are available in the armoury with the assessee.
Further whether a common portal can be notified with retrospective effect is another question which appears to settle in assessee’s favour if something of that sought is tried by the Government.
However to the government’s favour if retrospective amendment is not brought then still the proceedings initiated up till the issuance of notification may not be invalid in all those cases where the assessee has acted upon the notices or orders uploaded on the website www.gst.gov.in due to operation of Section 160(2). The said section is read as under
SECTION 160. Assessment proceedings, etc., not to be invalid on certain grounds
(2) The service of any notice, order or communication shall not be called in question, if the notice, order or communication, as the case may be, has already been acted upon by the person to whom it is issued or where such service has not been called in question at or in the earlier proceedings commenced, continued or finalised pursuant to such notice, order or communication.
But, this obvious miss of notifying common portal by the Government would come to the rescue in all those cases where the time limits have passed and the assessee have neither replied to the SCN or any other notice nor has filed an appeal. Clearly, in all those cases the mystery of common portal opens up a ray of hope to get an opportunity to undo such confirmed demands and get a fresh chance.
But the aforesaid chaos can shall settle only when a notification in this regard is issued under Section 146 of the Act. Up till then, the Hon’ble High Court(s) may have to entertain a lot more writ petitions on given question.
-By Shuchi Sethi, Senior Manager (Indirect Taxes) Dhadda & Co
– By Yash Dhadda, Partner (Indirect Taxes) Dhadda & Co