Singh Construction And Co. Vs State of Madhya Pradesh And Others (Madhya Pradesh High Court)
Madhya Pradesh High Court has set aside demand orders and appellate orders against Singh Construction And Co., ruling that the Goods and Services Tax (GST) show cause notices (SCN) were not properly communicated to the assessee. The court found that the SCNs were uploaded under the “Additional Notices” tab on the GST portal, leading to the petitioner’s unawareness of the proceedings.
The petitioner had challenged three orders, all dated July 14, 2023, for tax periods 2018-19, 2019-20, and 2021-22, which created demand against them under Section 73 of the Central Goods and Services Tax Act, 2017. Additionally, three appeal orders, all dated December 2, 2024, were impugned, as the Appellate Authority had dismissed the appeals solely on grounds of being filed beyond the prescribed time limit under Section 107 of the Act.
Counsel for Singh Construction And Co. argued that the company was unaware of the initial proceedings and subsequent orders because the SCNs were exclusively uploaded under the “Additional Notices” category on the GST portal. No other mode of communication was used to inform the petitioner. This lack of proper notification, it was contended, prevented the company from responding to the SCNs or filing timely appeals.
The High Court referenced several judicial precedents to support the petitioner’s claim.
- East Coast Constructions and Industries Ltd. v. Assistant Commissioner (ST) (Madras High Court, September 11, 2023): This judgment highlighted the confusion arising from communications being placed under two separate headings: “View Notices and Orders” and “View Additional Notices and Orders.” The Madras High Court had previously directed authorities to address this distinction, noting that “Additional Notices and Orders” were often found under “User Services” rather than the more prominent “View Notices and Orders.”
- Sabari Infra (P.) Ltd. v. Asstt. Commissioner (ST) (Madras High Court, July 31, 2023): This case further underscored the issue, where the Madras High Court observed that notices hosted in the “Additional Notices and Orders” dashboard often went unnoticed by assessees, leading to ex-parte orders. The court attributed the problem to the “complex architecture of the web portal.”
- Murugesan Jayalakshmi v. State Tax Officer (Madras High Court, February 8, 2024): This judgment indicated that the issue had been acknowledged and the portal redesigned, with both “View Notices” and “View Additional Notices” tabs now consolidated under a single heading.
- Umang Realtech (P.) Ltd v. Union of India (Delhi High Court) and Anhad Impex and another Vs. Assistance Commissioner (Delhi High Court, SCC Online Delhi 1135): These Division Bench judgments from the Delhi High Court, one of which included Justice Sanjeev Sachdeva, had relied on the Madras High Court rulings to determine insufficient service of show cause notice and violation of principles of natural justice under similar circumstances.
The Madhya Pradesh High Court concluded that the petitioner had indeed missed the SCN due to its placement under the “Additional Notices” tab. The impugned orders explicitly stated that the taxpayer had not replied or appeared, which the court found consistent with the petitioner’s claim of unawareness.
Consequently, the High Court set aside the demand orders dated July 14, 2023, and the appeal orders dated December 2, 2024. The respondents have been directed to reopen the portal to allow the petitioner to file a response to the SCNs (Form GST DRC-01) within two weeks. Following this, the Proper Officer is mandated to re-adjudicate the SCNs after providing a personal hearing and passing fresh speaking orders in accordance with law within the period prescribed under Section 75(3) of the Act.
The court clarified that it has not commented on the merits of the contentions of either party, reserving all rights and contentions. The petition has been disposed of accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
Petitioner impugns three orders all dated 14.07.2023 for the tax period 2018-19, 2019-20 and 2021-22 whereby demand has been created against the petitioner. Petitioner also impugns three appeal orders all dated 02.12.2024, whereby the Appellate Authority has dismissed the appeals solely on the ground that the same have been filed beyond time. The orders have been passed under Section 73 and 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Act).
2. Issue notice. Notice is accepted by learned counsel for respondents. With the consent of parties, the petition is taken up for final disposal.
3. Learned counsel for petitioner submits that the Petitioner was unaware of the orders passed and could not prefer the appeal within time, initiation of any such proceedings and accordingly could not respond to the same. He submits that the said Show Cause Notice was uploaded on the portal in the category of, “Additional Notices” and was not communicated to the petitioner through any other mode of communication. He further submits that it was merely uploaded on the web portal under the tab of “Additional Notices and Orders”, and accordingly, petitioner was unaware of any such proceedings initiated against it.
4. Reference may be had to the judgment of the High Court of Madras in W.P. No.26457/2023, titled East Coast Constructions and Industries Ltd. v. Assistant Commissioner (ST) dated 11.09.2023/[2023] 157 com66/(2023) 13 Centax 41 (Mad.), wherein the High Court of Madras has noticed that communications are placed under the heading of “View Notices and Orders” and “View Additional Notices and Orders”. The Madras High Court had directed the respondents to address the issue arising out of posting of information under two separate headings. As per the petitioner, the Menu “View Additional Notices and Orders” were under the heading of “User Services” and not under the heading “View Notices and Orders”.
5. This issue is further highlighted by another judgment of the Madras High Court dated 31.07.2023 in W.P. No.22369/2023 Sabari Infra (P.) Ltd. v. Asstt. Commissioner (ST) [2023] 154 com 147/(2023) 10 Centax 92 (Mad.) connected petitions, wherein the Madras High Court has noticed as under :-
“3. The only ground on which the, the impugned orders are under challenge is that the notices, which preceded the impugned orders were hosted in the Dashboard of the petitioner meant for ‘Additional Notices and Orders ‘whereas, the notices should have been hosted by the respondent in the Dash Board for,, View Notices and Orders’.
4. The learned counsel for the petitioner has drawn attention to the manual copy given by the respondent in the web portal, which reads as under:-
“How can I view or download the notices and demand orders issued by the GST tax authorities?
To view or download the notices and demand orders issues by the GST tax authorities, perform the following steps :
1. Access the gst.gov.in URL. The GST Home page is displayed.
2. Login to the GST Portal with valid credentials.
3. Click the Services User Services View Notices and Orders command.
5. It is submitted that had the notice been uploaded in the correct place, the petitioner would have seen it and replied to the same and participated in the proceedings. Since the Notices and the Orders were hosted in the Dashboard of the petitioner meant for “Additional Notices and Orders”, the petitioner failed to notice and file a reply to the Show Cause Notice.
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9. The problem has arisen on account of the complex architecture of the web portal. It has been designed to facilitate easy access of information’s. It has however resulted in the petitioner failing to notice the notice that was issued to the petitioner prior to the impugned order on 20.03.2023. It went unnoticed by the petitioner, as a result of which, the impugned orders have been passed on 29.04.2023.”
6. Attention is also drawn to yet another judgment of Madras High Court dated 08.02.2024 in Writ Petition No.2746/2024, titled Murugesan Jayalakshmi v. State Tax Officer [2024] 159 taxmann.com545/103 GST133/2024 (84) G.S.T.L. 178 (Mad.)/(2024) 15 Centax 369 (Mad.), wherein the Madras High Court has noticed that the said issue has been addressed and the portal has been redesigned and both the “View Notices” tab and “View Additional Notices” tab are under one heading.
7. Reference is also made to the Judgment of the Division Bench of the Delhi High Court in Umang Realtech (P.) Ltd v. Union of India [2024] 162 com817 (Delhi) and in Anhad Impex and another Vs. Assistance Commissioner [2024] SCC Online Delhi 1135, to which one of us (Sanjeev Sachdeva J.) was a party, wherein in similar circumstances, the Judgments of the Madras High Court have been relied upon to hold insufficiency of service of show cause notice and violation of principles of natural justice.
8. Clearly, petitioner has made out a case that Petitioner has missed out the receipt of the notice and accordingly could not respond to the Show Cause Notice because it was merely uploaded on the portal under the category of “Additional Notices” tab and accordingly could not respond to the Show Cause Notice. The impugned order categorically records that the tax payers was put to notice however, no reply by way of GST DRC-07. However, the tax payer neither deposited the tax amount nor filed any response the said notice and consequently, the demand has been created against the petitioner.
9. Perusal of the impugned order shows that the impugned order categorically records that the taxpayer has not replied or appeared in person. Consequently, we are of the view that petitioner needs to be granted one opportunity to respond to the Show Cause Notice and thereafter, the Show Cause Notice to be re-adjudicated.
10. In view of the above, impugned orders dated 14.07.2023 and appeal orders dated 02.12.2024 are set aside. Respondents shall open the portal to enable the Petitioner to file a response to the said Show Cause Notices Form GST DRC-01 which shall be filed within a period of two weeks. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notices after giving an opportunity of personal hearing and shall pass fresh speaking orders in accordance with law within the period prescribed under Section 75 (3) of the Act.
11. It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party. All rights and contentions of parties are reserved.
12. Petition is disposed of in the above terms.
