2025 (4) TMI 1639 - HC - GST

Challenge to order in original - the written submissions filed by the Petitioner have not been considered by the Respondent No. 1 and no personal hearing notice has been issued either - violation of principles of natural justice - HELD THAT - The Petitioner having had no the opportunity to file its reply to the Department and no personal hearing having been effectively afforded to the Petitioner this Court is of the opinion that the matter deserves to be remanded to the Department for fresh consideration only insofar as the Petitioner is concerned. The Department shall make an endeavour to ensure that in terms of Section 169 of the Central Goods and Services Act 2017 assessees are served through the common GST portal as also through their personal email and mobile number. In addition the notice may also be sent through speed post so that situations as have arisen in this case can be avoided in the future. Let the final SOP be placed on record by the next date of hearing - Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

- Whether the Petitioner's written submissions and reply to the Show Cause Notice were duly considered by the Department before passing the impugned Orders-in-Original.

- Whether the Petitioner was afforded a proper opportunity of personal hearing in compliance with the principles of natural justice and the procedural requirements under the Central Goods and Services Tax Act, 2017.

- Whether the Department's communication of personal hearing notices through email and other modes was effective and reached the Petitioner.

- Whether the impugned orders, which proceeded ex-parte on the basis that no reply or hearing was provided, are legally sustainable.

- The appropriate remedial action to be taken in light of any procedural lapses identified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Consideration of Petitioner's Written Submissions and Reply to Show Cause Notice

Relevant legal framework and precedents: Under the Central Goods and Services Tax Act, 2017, and principles of natural justice, an assessee is entitled to have their written submissions and replies to show cause notices duly considered before any adverse order is passed. The failure to consider such submissions may vitiate the adjudication process.

Court's interpretation and reasoning: The Court examined the record, including the Petitioner's reply dated 18th August, 2024 to the Show Cause Notice dated 4th December, 2023, which was detailed and addressed the issues relating to Input Tax Credit claimed. However, the impugned Orders-in-Original erroneously recorded that no reply had been filed by the Petitioner. The Court noted that the Department's orders explicitly stated that no written submissions or replies were received and that no personal hearing was attended by the Petitioner.

Key evidence and findings: The Petitioner placed on record a screenshot from the GST portal confirming that their written submissions were uploaded. The Department did not dispute the uploading but contended that the personal hearing notice was sent by email, which the Petitioner denied receiving. The impugned orders' excerpts demonstrate that the Department proceeded on the basis that no reply or hearing was provided.

Application of law to facts: The Court found that the Department failed to consider the Petitioner's written submissions and reply, which is a fundamental requirement under the law for fair adjudication. The misrecording of facts in the impugned orders undermined the procedural fairness owed to the Petitioner.

Treatment of competing arguments: The Department argued that personal hearing notices were communicated via email and speed post, and ample opportunities were provided. The Petitioner disputed receipt of the email notice and contended that their submissions were ignored. The Court found merit in the Petitioner's contention, noting a clear communication failure.

Conclusion: The Court concluded that the Petitioner's written submissions were not considered, which constituted a breach of natural justice and procedural fairness.

Issue 2: Affording Personal Hearing and Communication of Hearing Notices

Relevant legal framework and precedents: Section 169 of the Central Goods and Services Tax Act, 2017 mandates that personal hearings be granted to assessees and that notices be served in a manner ensuring effective communication. The principles of natural justice require that the affected party be given a reasonable opportunity to be heard.

Court's interpretation and reasoning: The Department contended that personal hearing notices were sent by email to the Petitioner's registered email address and by speed post to the registered address. The Petitioner denied receipt of the email and argued that no personal hearing notice was received, resulting in no opportunity to be heard. The Court observed that the Department's email was placed on record but was not received by the Petitioner, indicating a communication lapse.

Key evidence and findings: The Court noted that the Department relied on email communication, but the Petitioner's denial of receipt was credible. The Department's reliance solely on email and speed post was insufficient to conclusively prove effective service, especially when the Petitioner's submissions were uploaded on the GST portal but not considered.

Application of law to facts: The Court emphasized the necessity of multiple modes of communication to ensure notices reach the assessee, including uploading on the GST portal, email communication, mobile messaging, and speed post. The Court directed the Department to communicate personal hearing notices via all these channels to avoid future miscommunication.

Treatment of competing arguments: The Department maintained that sufficient opportunities were provided, citing multiple dates for personal hearings and notices sent. The Petitioner's contention of non-receipt was accepted due to lack of evidence to the contrary and the failure to consider their submissions.

Conclusion: The Court held that the Petitioner was not effectively afforded a personal hearing opportunity and that the communication of notices was deficient, warranting remedial measures.

Issue 3: Validity of the Impugned Orders Passed Ex-Parte

Relevant legal framework and precedents: The principles of natural justice and statutory mandates require that orders should not be passed ex-parte without providing the assessee an opportunity to be heard and to present their case. Failure to do so renders the order liable to be set aside.

Court's interpretation and reasoning: The impugned orders proceeded on the basis that no reply was filed and no personal hearing was attended by the Petitioner, leading to ex-parte adjudication. The Court found this to be factually incorrect and procedurally improper.

Key evidence and findings: The Petitioner's detailed reply and uploaded submissions were ignored; no effective personal hearing was conducted. The impugned orders wrongly recorded non-filing of replies and non-attendance at hearings.

Application of law to facts: The Court held that the impugned orders suffer from a fundamental procedural defect and cannot be sustained in law.

Treatment of competing arguments: The Department's reliance on ex-parte adjudication was rejected due to the failure to provide proper notice and consider submissions.

Conclusion: The impugned orders are liable to be set aside and the matter remanded for fresh adjudication.

Issue 4: Appropriate Remedial Action

Court's reasoning and directions: The Court directed that the matter be remanded to the Department for fresh consideration of the Petitioner's submissions and for affording a proper personal hearing. The Court mandated that personal hearing notices be uploaded on the GST portal and communicated via email and mobile number, with additional communication by speed post to avoid future lapses.

The Court also directed the Department to ensure compliance with Section 169 of the CGST Act regarding service of notices and to finalize and place on record the Standard Operating Procedures (SOP) for litigation matters to streamline communication and avoid similar issues.

3. SIGNIFICANT HOLDINGS

"The Petitioner's written submissions have not been perused by the Department and the Department's email has not been received by the Petitioner."

"The impugned orders, however, unfortunately record that no reply has been filed by the Petitioner."

"The Petitioner having had no opportunity to file its reply to the Department and no personal hearing having been effectively afforded to the Petitioner, this Court is of the opinion that the matter deserves to be remanded to the Department for fresh consideration, only insofar as the Petitioner is concerned."

"The personal hearing notice shall be uploaded on the GST Portal and shall also be communicated to the Petitioner on the following email address and mobile number."

"The Department shall make an endeavour to ensure that in terms of Section 169 of the Central Goods and Services Act, 2017, assessees are served through the common GST portal as also through their personal email and mobile number. In addition, the notice may also be sent through speed post so that situations as have arisen in this case, can be avoided in the future."

Core principles established include the mandatory consideration of an assessee's written submissions before passing any order, the necessity of effective communication of notices through multiple channels to ensure receipt, and the requirement of affording a meaningful opportunity of personal hearing in accordance with natural justice and statutory provisions.

Final determinations:

- The impugned orders are set aside insofar as they pertain to the Petitioner.

- The matter is remanded to the Department for fresh adjudication after considering the Petitioner's submissions and affording a proper personal hearing.

- The Department is directed to ensure effective communication of notices through the GST portal, email, mobile, and speed post.

- The Department is to finalize and place on record the SOP for litigation matters to prevent recurrence of such procedural lapses.