2023 (2) TMI 720 - HC - GST

Validity of assessment order u/s 74(5) - SCN was not uploaded on the GSTN portal / website - Whether show cause notice as contemplated under Rule 142(1) of Central Goods and Services Tax Act, 2017 (CGST Act) was mandatory to be followed before passing order under Section 74(5) of the Central GST Act/Punjab GST Act, 2017 - HELD THAT - Reference was made to Rule 142(1) of the CGST Act and it was observed that the only mode prescribed for communicating to the show cause notice/order is by way of uploading the same on the website of the revenue. The writ petition was allowed with liberty to the revenue to follow the procedure prescribed under Rule 142 (1) of the CGST Act and impugned demand dated 18.09.2020 is struck down. In the facts of the present case, it is nowhere stated in the reply dated 06.08.2021 filed by the respondents that they had uploaded the notice on the website of the revenue as per Rule 142(1) of the CGST Act, 2017 before passing final orders dated 12.03.2021 and 10.03.2021 (Annexures P- 6 and P-7). Hence, the present writ petitions are allowed and orders dated 12.03.2021 (Annexure P-6) and detailed order dated 10.03.2021 (Annexure P-7) are set aside and the matter is remanded back to the Assessing Officer to pass fresh orders after issuing notice as contemplated under Rule 142(1) of the CGST Act and afford opportunity of hearing to the petitioner(s) in accordance with law.

Summary

Issues involved:
Quashing of order under Section 74(5) of the Central GST Act/Punjab GST Act, 2017 without following Rule 142(1) - Mandatory show cause notice requirement.

Detailed Analysis:

The High Court considered two writ petitions with identical issues seeking the quashing of orders passed under Section 74(5) of the Central GST Act/Punjab GST Act, 2017. The main question was whether a show cause notice as per Rule 142(1) of the CGST Act was mandatory before passing such an order. The petitioner argued that proper procedure was not followed, emphasizing the necessity of Rule 142(1) compliance before final assessment orders were issued.

The respondents contended that notices were served to the petitioner before initiating assessment proceedings under Section 74(5) of the Acts. They highlighted the various attempts made to involve the petitioner in the process, including issuing summon notices and providing opportunities for compliance. The State Tax Officer affirmed that due process was followed, but the petitioner's non-compliance led to the final order being passed based on available records and revenue interests.

In support of the petitioner's case, reference was made to a judgment by the High Court of Madhya Pradesh where non-compliance with Rule 142(1) led to a demand being struck down. The judgment emphasized the electronic communication of notices as prescribed by the rule, which was crucial for due process. The High Court found that in the present case, there was no evidence that the notice was uploaded on the revenue website as required by Rule 142(1) before the final orders were issued.

Consequently, the High Court allowed the writ petitions, setting aside the orders dated 12.03.2021 and 10.03.2021, and remanding the matter back to the Assessing Officer. The court directed the officer to follow the procedures outlined in Rule 142(1) of the CGST Act, ensuring that proper notice is issued and the petitioner is given a fair hearing in accordance with the law.