2025 (4) TMI 1381 - HC - GST

Violation of principles of natural justice - ex parte impugned assessment orders - no opportunity of personal hearing was provided by the respondent prior to the passing of assessment orders - HELD THAT - It is clear that any decision order summons notices and other communications under the GST Act or Rules made thereunder shall be served by any one of the modes as prescribed therein. The word or has been used immediately after each sub-clause which means each clause is alternative to each other. Thus if any one of the modes is adopted by the respondent to send notices the same would be considered as a sufficient service. Accordingly the respondents had adopted one of the modes provided in the above provisions i.e. to make it available in common portal in terms of Section 169(1)(d) of the GST Act and hence the same has to be considered as sufficient service . Whether making it available in the common portal shall be deemed to be served in terms of Section 169(2) of the GST Act i.e. either by tendering or publishing or affixing? - HELD THAT - As per the provisions of sub-section (1) in terms of Section 169(1)(a) the notice has to be served by way of tendering ; in terms of Section 169(1)(b) the notice has to be served by way of RPAD ; in terms of Section 169(1)(e) the notice has to be served by way of publication ; in terms of Section 169(1)(f) the notice has to be served by way of affixing it at the last known place of business or residence of the Assessee. However the applicability of provisions of Section 169(2) for the provisions of Section 169(1)(c) (d) i.e. uploading the notices in portal or sending to e-mail id of an Assessee. A reading of the provisions of Section 13(2)(a)(i) of the IT Act makes it clear that if the Assessee has designated any computer resource for the purpose of receiving the electronic records the receipt of the said electronic records will occur when it enters into the designated computer resource. On the other hand Section 13(2)(a)(ii) of the IT Act deals with the aspect that if the notices were uploaded in any computer resource which was not designated by the addressee the receipt will occur only at the time when the electronic records is retrieved by the said addressee - There is no dispute on the aspect that the common portal or the e-mail id of the concerned Assessee is the computer resource. Both the parties have no dispute on the said aspect. Now the only dispute that has to be decided by this Court is as to whether the common portal is the designated computer resource or not. In terms of provisions of Section 169(1)(d) of the GST Act read with Section 13(2)(a)(i) 13(2)(b) of the IT Act it is crystal clear that once if the notices orders and other communications are uploaded in the common portal the receipt would occur immediately when the electronic records enter the said common portal despite the fact that it is designated as computer resource by the Assessee or not - by reading the provisions of Section 13(2)(a) (b) of the IT Act it is clear that from the date of issuance of GST Registration number to the Assessee s until its cancellation whenever the summons notices and other communications were uploaded in the common portal the receipt occurs once when the said electronic records enter into the said common portal which is the computer resource of the Assessee. In such view of the matter this Court is inclined to hold that the uploading of notices orders and other communications in terms of Section 169(1)(d) of the GST Act is a sufficient service. The respondents being well aware of the fact the mode of service adopted by them is not effective but only sufficient in terms of Section 169(1)(d) of the GST Act had proceeded to pass ex parte assessment order. Normally when a mode adopted by the respondents is not effective they should have explored the possibilities by sending notices through other modes of services as prescribed therein. There is no bar for the respondent to do so. When such being the case this Court is unable to understand as to why these Assessing officers had repeatedly sent all the notices reminders etc. through ineffective mode of service - this Court is inclined to set aside the ex parte assessment orders. However since the mode adopted by the respondent is sufficient mode the petitioner had chances to view the portal and participate in the proceedings but they had failed to do so. Therefore this Court is of the view that the fault is on both the petitioner as well as the respondent and thus this Court is inclined to set aside the impugned orders on terms. Conclusion - The fault for non-response lies both with the petitioners for not accessing the portal or responding and with the respondents for not adopting effective modes of service and not affording personal hearing. The matter is remanded to the concerned Assessing Officer for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent within a period of four weeks from the date of receipt of copy of this order - Petition disposed off by way of remand.

Summary

The core legal questions considered by the Court in this batch of writ petitions primarily revolve around the validity and sufficiency of service of notices and orders under the Goods and Services Tax Act, 2017 (GST Act), particularly when such communications are made by uploading on the common portal. The issues include:

1. Whether the mode of service by uploading notices and orders on the common GST portal, as prescribed under Section 169(1)(d) of the GST Act, constitutes valid and sufficient service in law.

2. Whether the legal fiction of deemed service under Section 169(2) of the GST Act applies to notices served by uploading on the common portal.

3. The applicability and interpretation of Sections 11, 12, and 13 of the Information Technology Act, 2000 (IT Act) concerning the time and place of receipt of electronic records, and whether the common portal qualifies as a "designated computer resource" for purposes of electronic service.

4. Whether the respondents were obligated to adopt alternative modes of service, such as Registered Post with Acknowledgment Due (RPAD), when notices uploaded on the portal were not effectively brought to the attention of the petitioners.

5. Whether passing ex parte assessment orders without providing an opportunity of personal hearing violates the principles of natural justice, especially when the petitioners were unaware of the notices.

6. The consequences and appropriate relief when service is held to be sufficient but not effective, including the conditions under which impugned ex parte orders should be set aside and remanded.

Issue-wise Detailed Analysis:

1. Validity and Sufficiency of Service by Uploading on Common Portal (Section 169 of GST Act):

The Court examined Section 169(1) of the GST Act, which prescribes multiple alternative modes of service for decisions, orders, summons, notices, or other communications. Clause (d) authorizes service by making the communication available on the common portal. The use of the disjunctive "or" between sub-clauses indicates that any one mode is sufficient for valid service.

The respondents had adopted this mode by uploading notices and orders on the portal. The Court held that such service is "sufficient" in law. Reliance was placed on precedents where it was held that making an order available on the common portal amounts to "tendering" of that order to the recipient. The Court rejected the argument that the absence of the term "uploaded" in Section 169(2) (which creates deeming fiction of service) implies that uploading is not a valid mode of service.

2. Application of Section 169(2) of GST Act and Legal Fiction of Deemed Service:

Section 169(2) provides that service shall be deemed to have been effected on the date it is tendered, published, or affixed, but this deeming fiction applies only to certain modes enumerated in Section 169(1)(a), (b), (e), and (f). It does not apply expressly to service by email or uploading on the portal under clauses (c) and (d).

The Court noted that this exclusion is because service by email or uploading is instantaneous, unlike postal or publication modes which involve a time lag. Hence, the time of service for electronic modes is governed by the IT Act.

3. Applicability of IT Act Provisions and Designated Computer Resource Concept:

Sections 11, 12, and 13 of the IT Act govern the time and place of dispatch and receipt of electronic records. Section 13(2) distinguishes between electronic records sent to a designated computer resource and those sent to a non-designated resource.

The Court examined whether the common portal qualifies as a "designated computer resource" of the assessee. While the IT Act does not define "designated computer resource," the Court applied the ordinary meaning of "designated" as "appointed," "nominated," or "marked out" for a specific purpose.

The Court held that the legislative framework and the GST registration process effectively designate the common portal as the computer resource for receiving electronic communications. The GST Act's Section 146 recognizes the common portal as the interface for all GST-related communications.

Therefore, service by uploading on the common portal is deemed to be receipt at the time the electronic record enters this designated computer resource, regardless of whether the assessee explicitly "designated" it. This interpretation aligns with Section 13(2)(a)(i) of the IT Act, which governs receipt at the designated resource.

Where an assessee has designated a different computer resource (e.g., a specific email ID), service to that resource applies under Section 13(2)(a)(i), and service to other resources would be governed by Section 13(2)(a)(ii), i.e., receipt only upon retrieval.

In the absence of any designated computer resource, Section 13(2)(b) applies, deeming receipt when the electronic record enters the computer resource of the addressee.

4. Obligation to Use Alternative Modes of Service When Portal Service is Ineffective:

Although service by uploading on the portal is sufficient, the Court recognized that it may not always be effective in bringing the notice to the assessee's attention. The petitioners cited practical difficulties such as notices being uploaded under "Additional Notices and Orders" instead of "View Notices," failure of GST consultants or employees to monitor the portal, and lack of computer literacy among senior citizens.

The Court observed that the respondents, being aware of the possible ineffectiveness of portal-only service, should have resorted to alternative modes such as RPAD, especially when no response was received to the notices uploaded on the portal. This would have ensured effective communication and avoided ex parte proceedings.

The Court emphasized that while Section 169 provides alternative modes of service, there is no bar on the respondent using multiple modes to ensure effective service. The failure to do so, followed by passing ex parte assessment orders, was considered a procedural lapse.

5. Violation of Principles of Natural Justice by Passing Ex Parte Orders Without Personal Hearing:

In several cases, the petitioners had filed replies but were not afforded personal hearings before passing adverse orders. Section 75(4) of the GST Act mandates an opportunity of personal hearing before passing such orders.

The Court held that passing assessment orders without personal hearings in these circumstances violated principles of natural justice and statutory provisions, warranting setting aside of such orders without conditions.

6. Consequences and Relief:

The Court acknowledged that the service by uploading on the portal is legally sufficient but may not be practically effective. Since the petitioners failed to access the portal or respond, and the respondents failed to adopt alternative effective modes, the fault lies on both sides.

Accordingly, the Court set aside the impugned ex parte assessment orders and remanded the matters for fresh consideration with the following directions:

• Petitioners to pay a percentage of the disputed tax amount (10% or 25% depending on case circumstances) as a condition for remand in most cases.
• Petitioners to file replies within three weeks of payment.
• Respondents to provide clear 14-day notices affording opportunity of personal hearing and decide the matters afresh in accordance with law.
• Bank attachment orders, if any, to be lifted upon setting aside of impugned orders.

In cases where personal hearing was not provided despite filing of replies, orders were set aside without any conditions.

Treatment of Competing Arguments:

The petitioners argued that mere uploading on the portal is insufficient service under Section 169 and IT Act, emphasizing the need for designation of the portal as a computer resource and alternative modes of service. They relied on the definitions and procedural fairness principles.

The respondents countered that the GST Act's Section 169 provides alternative modes of service, any one of which suffices. They contended that the common portal is a designated computer resource by operation of law and practice, and service is instantaneous upon uploading. They highlighted the statutory recognition of the portal under Section 146 and the automated SMS/email alerts sent as additional safeguards. The respondents argued that petitioners' failure to monitor the portal or their consultants' negligence cannot prejudice the Department's right to recover tax.

The Court balanced these arguments by holding that while uploading on the portal is legally sufficient and deemed effective service, practical effectiveness demands the use of alternative modes when notices remain unacknowledged. The Court emphasized adherence to natural justice and procedural fairness.

Significant Holdings:

"Any decision, order, summons, notice or other communication under the GST Act shall be served by any one of the modes prescribed in Section 169(1), and service by uploading on the common portal under Section 169(1)(d) is a sufficient mode of service."

"The legal fiction of deemed service under Section 169(2) applies only to modes of service by tendering, registered post, publication, or affixing, and not to electronic modes such as uploading on the portal or email, which are governed by the Information Technology Act."

"The common portal is a designated computer resource for the purpose of receiving electronic records under the IT Act, and receipt of notices and orders occurs when the electronic record enters the portal, i.e., upon uploading."

"Where service by uploading on the portal is not effective in bringing the notice to the assessee's attention, the Department is obligated to resort to alternative modes of service such as Registered Post with Acknowledgment Due to ensure effective communication."

"Passing ex parte assessment orders without providing an opportunity of personal hearing, especially when replies have been filed, violates principles of natural justice and statutory provisions."

"Ex parte assessment orders passed on the basis of service by uploading alone, without effective communication and opportunity of hearing, are liable to be set aside and remanded for fresh consideration on payment of a portion of the disputed tax amount."

"The fault for non-response lies both with the petitioners for not accessing the portal or responding and with the respondents for not adopting effective modes of service and not affording personal hearing."

The Court's final determination was to uphold the sufficiency of service by uploading on the portal but to require the Department to ensure effective service by employing alternative modes when necessary, to uphold principles of natural justice by providing personal hearings, and to set aside and remand the ex parte assessment orders subject to conditions to balance the interests of both parties and judicial resources.