2025 (1) TMI 772 - HC - GST

Violation of principles of natural justice - petitioner was denied opportunity to put up its defence - absence of service of notice/ the show cause notice - Remedy of appeal having been denied on the ground of delay that was for want of knowledge - HELD THAT - The court is of the considered view that statutes provide procedure either in their substantive provisions, or under the rules framed thereunder, to ensure that orders are not passed by the authorities whimsically, more especially where the authorities exercise power which is quasi judicial in nature or akin to that. The legal position is well settled on the point that when a thing is required to be done in a particular manner then the same shall have to be done in that manner alone. In the case of SHARIF-UD-DIN VERSUS ABDUL GANI LONE 1979 (11) TMI 225 - SUPREME COURT , it was held that whenever a statute prescribes that a particular act is to be done in particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence should not follow. As and when mandatory requirement of law is not taken care of in the matter of compliance of procedure before taking decision by assessing authority or any competent authority for that matter, then it becomes inherent defect in the decision making process which cannot be cured at a later stage. If in a decision making procedure adopted by the authority is de hors the provisions of the act or rules framed thereunder, it is liable to be rendered as flawed one. A division bench in the case of M/S SKYLINE AUTOMATION INDUSTRIES VERSUS STATE OF U.P. AND ANOTHER 2023 (1) TMI 379 - ALLAHABAD HIGH COURT has dealt with this principle of law to hold that any subsequent reminder will not cure inherent defect in proceedings initiated against the petitioner. The procedural requirements are mandatory, and failure to comply invalidates subsequent actions. It also established that a fair opportunity must be provided to all parties, and appeal timelines should consider actual knowledge of orders. The order passed by the assessing officer dated 11.12.2023 shall be taken to be notice within the meaning of Section 73 of the GST Act, 2017 to enable the petitioner to file his objections and place his documents before assessing officer/competent authority for its consideration. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment from the Allahabad High Court primarily addresses the following core legal questions:

Whether the petitioner was denied a fair opportunity to defend against a tax liability due to the alleged non-receipt of a show cause notice under Section 73 of the GST Act, 2017.
Whether the rejection of the petitioner's appeal on the grounds of being time-barred, due to lack of knowledge of the order, rendered the petitioner remediless.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Denial of Fair Opportunity Due to Non-Receipt of Show Cause Notice

Relevant Legal Framework and Precedents: The case hinges on the procedural requirements under Section 73 of the GST Act, 2017, which mandates that a show cause notice must be served to the concerned party to ensure a fair opportunity to respond. The court referenced previous judgments, including Ola Fleet Technologies Pvt. Ltd. v. State of U.P., which emphasized the necessity of proper notice service.
Court's Interpretation and Reasoning: The court noted that the petitioner claimed not to have received the show cause notice, which was crucial for preparing a defense against the tax liability. The court emphasized that statutory procedures must be strictly followed, as highlighted in Sharif-Ud-Din v. Abdul Gani Lone, where it was held that failure to comply with mandatory procedural requirements renders the subsequent actions invalid.
Key Evidence and Findings: The petitioner argued that the notice was not available on the GST portal under the tab "view notices and orders," and was not communicated via email. This lack of communication was pivotal in the petitioner's inability to respond timely.
Application of Law to Facts: The court applied the principle that procedural requirements are mandatory, and any deviation invalidates the proceedings. The court found that the absence of proper notice service deprived the petitioner of the opportunity to present a defense.
Treatment of Competing Arguments: The respondent's argument that the petitioner should have been aware of the proceedings was countered by the court's reliance on the principle that legal procedures must be adhered to, ensuring no party is condemned unheard.
Conclusions: The court concluded that the petitioner was indeed denied a fair opportunity due to the procedural lapse, thus invalidating the ex parte order.

Issue 2: Rejection of Appeal Due to Lack of Knowledge of the Order

Relevant Legal Framework and Precedents: The legal framework involves the appeal provisions under the GST Act, which allow for appeals within a prescribed timeframe. The court referred to the principle that procedural errors leading to a lack of knowledge can render an appeal rejection unjust.
Court's Interpretation and Reasoning: The court reasoned that the rejection of the appeal on the grounds of being time-barred was unjust because the petitioner was unaware of the order due to the lack of proper notice service.
Key Evidence and Findings: The petitioner became aware of the order only after it was uploaded on the dashboard, which was significantly after the order was passed, leading to the appeal being filed beyond the prescribed period.
Application of Law to Facts: The court applied the principle that the appeal period should commence from the date of actual knowledge of the order, not merely from the date the order was passed.
Treatment of Competing Arguments: The court dismissed the argument that the petitioner should have been more vigilant, emphasizing the statutory obligation to ensure proper notice service.
Conclusions: The court concluded that the appeal was unjustly rejected and directed a fresh opportunity for the petitioner to present their case.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The court reiterated, "whenever a statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence should not follow."
Core Principles Established: The judgment reinforced the principle that procedural requirements are mandatory, and failure to comply invalidates subsequent actions. It also established that a fair opportunity must be provided to all parties, and appeal timelines should consider actual knowledge of orders.
Final Determinations on Each Issue: The court determined that the impugned orders were unsustainable due to procedural lapses. It directed that the order dated 11.12.2023 be treated as a notice, allowing the petitioner to submit objections and documents within eight weeks. The assessing officer was instructed to reconsider the case afresh, providing an opportunity for a hearing.

The judgment underscores the importance of adhering to procedural mandates to ensure fairness and justice in tax liability cases under the GST framework. The court's directions aim to rectify procedural oversights and provide the petitioner a fair opportunity to contest the tax liability.

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