2025 (2) TMI 351 - HC - GST

Challenge to impugned order passed by the first respondent - neither the show cause notices nor the impugned order of assessment has been served on the petitioner by tender or sending it by RPAD - mismatch between GSTR-3B and Form 26AS - HELD THAT - The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondents within a period of four weeks from the date of receipt of a copy of this order. The impugned order dated 10.10.2023 is set aside. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the service of the show cause notices and the impugned assessment order through the GST Portal, instead of by tender or Registered Post with Acknowledgment Due (RPAD), was valid and provided adequate notice to the petitioner.
• Whether the petitioner should be granted an opportunity to contest the discrepancies identified in the assessment year 2017-18, given the claim of non-receipt of notices and subsequent compliance efforts.
• The conditions under which the impugned order can be set aside and the process for remanding the matter back to the adjudicating authority.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Service of Notices

• Relevant Legal Framework and Precedents: The legal requirement for serving notices under the Goods and Services Tax Act, 2017, typically involves direct service or RPAD to ensure the recipient is adequately informed of proceedings.
• Court's Interpretation and Reasoning: The Court recognized the petitioner's argument that notices were not served through conventional means, which potentially deprived the petitioner of the opportunity to respond. The reliance on the GST Portal for notice service was deemed insufficient in ensuring the petitioner was aware of the proceedings.
• Key Evidence and Findings: The petitioner did not receive the notices in a manner that would ensure awareness and participation, as evidenced by the lack of response to the notices uploaded on the GST Portal.
• Application of Law to Facts: The Court applied the principles of fair notice and opportunity to be heard, concluding that the method of service used was inadequate under the circumstances.
• Treatment of Competing Arguments: The respondent's lack of objection to the petitioner's request for a remand and opportunity to contest was taken into account, supporting the decision to set aside the impugned order.
• Conclusions: The Court concluded that the service of notices via the GST Portal did not meet the legal standards for adequate notice, warranting a remand for further proceedings.

Issue 2: Opportunity to Contest Discrepancies

• Relevant Legal Framework and Precedents: The principle of natural justice requires that parties be given a fair opportunity to present their case, especially when discrepancies in tax assessments are alleged.
• Court's Interpretation and Reasoning: The Court noted the petitioner's willingness to address the discrepancies and the payment of a substantial portion of the disputed taxes as indicative of good faith and a desire to comply with tax obligations.
• Key Evidence and Findings: The petitioner had remitted more than 75% of the disputed taxes, demonstrating an intent to resolve the matter and contest the discrepancies if given the opportunity.
• Application of Law to Facts: The Court applied the principles of equity and fairness, determining that the petitioner should be allowed to contest the discrepancies with the adjudicating authority.
• Treatment of Competing Arguments: The respondent's lack of serious objection to the petitioner's request for a remand was considered, facilitating the decision to allow further proceedings.
• Conclusions: The Court concluded that the petitioner should be granted an opportunity to present objections and supporting documents, subject to specific conditions.

SIGNIFICANT HOLDINGS

• Core Principles Established: The judgment reaffirmed the necessity of proper notice service and the opportunity to be heard as fundamental components of due process in tax assessments.
• Final Determinations on Each Issue:
  • The impugned order dated 10.10.2023 was set aside due to inadequate service of notices.
  • The petitioner was required to deposit 25% of the disputed taxes within four weeks, with adjustments for any amounts already paid.
  • Failure to comply with the payment condition would result in the restoration of the impugned order.
  • Upon compliance, the impugned order would be treated as a show cause notice, allowing the petitioner to submit objections within four weeks.
  • Any bank account attachments would be lifted upon compliance with the payment condition.

The Court's decision provided a structured framework for the petitioner to address the alleged discrepancies while ensuring compliance with procedural requirements. The emphasis on fair notice and the opportunity to contest underscores the importance of procedural fairness in tax adjudication processes.