ANALYSIS OF SECTION 169 of CGST ACT 2017

[K Balasubramanian]

1. Introduction: Section 169 is on Service of notice in certain circumstance. There are six different modes available for serving of any notice, order, decision, or any other communication. It is the wisdom of the legislature at the time of introduction of the CGST Act 2017 on 01/07/2017 to the nation that the legislature had clear view on the issue that the information purported to be communicated under the Act/Rules must reach the taxpayer to enable him to take further course of action to resolve the issues. However, out of several modes, the field formation in most of the cases choose the route of uploading in the portal. Though the message contained in Section 169 is abundantly clear that the communication intended by the proper officer must reach the knowledge of the taxpayer, often notices as well as orders are uploaded in the GST PORTAL only. Here again, as against two headings named as notices and orders and additional notices and orders, mostly the additional notices or orders heading is chosen. The number of cases reaching the High Courts in INDIA on Section 169  gives us a feeling that the proper officer is choosing this particular mode of communication against various other modes prescribed in the same Section with an intention that it should miss the knowledge of the tax payer so that orders may be confirmed without adhering to the principles of natural justice by deliberately choosing the heading additional notices and orders.

2. Various Modes: a) giving or tendering directly (Physical mode) b) Registered post or speed post (Physical mode) c) e mail   d) making it available in the common portal  e) Publication in newspaper f) Affixing the notice in business or residence premises, when a to e are NOT PRACTICABLE.   It may be noticed that Section 169(1) has followed the above order of a to f so as to facilitate the proper officer to communicate the intended issues in a convenient manner to ensure that ultimately, the communication reaches the taxpayer.

3. Taking advantage of the Language of the Section: The proper officers, without even exploring the modes under a to c, mostly follow the mode d which is uploading the information in the portal. While as per legal requirement, it may be one of the acceptable modes of communication, it appears that the proper officer always post the SCN, ORDER etc under the column additional notices and orders so as to ensure that the taxpayer invariably misses the communication. Here, my only question is, if at all, as a policy matter the GST Authorities follow the practice of uploading in the portal, where is the justification to post the same under ADDITIONAL NOTICES AND ORDERS?.

4. PATNA HIGH COURT: Various issues arising out of Section 169 as well as connected ones were dealt at length by the PATNA HIGH COURT on 03/03/2025 in the case of M/S LORD VISHNU CONSTRUCTION PVT. LTD. VERSUS THE UNION OF INDIA, THE STATE OF BIHAR, THE COMMISSIONER CUM SECRETARY, DEPARTMENT OF STATE TAX, GOVERNMENT OF BIHAR, MAIN SECRETARIAT, PATNA, THE DEPUTY COMMISSIONER OF STATE TAX, PATNA CENTRAL CIRCLE 2, PATNA, THE JOINT COMMISSIONER OF STATE TAX, PATNA CENTRAL CIRCLE 2, PATNA, THE ASSISTANT COMMISSIONER, STATE TAX, PATNA CIRCLE, CIRCLE 2, PATNA - 2025 (3) TMI 545 - PATNA HIGH COURT. The article is on the views expressed by the PATNA HIGH COURT in the above case.

5. Interference: In several cases, various High Courts in India have uniformly held that whenever the notices/orders are posted in the portal under additional notices/orders, the impugned orders of the assessing officers require to be interfered. These decisions have mostly resulted in one more opportunity of hearing to the taxpayer and re adjudication of the SCN (Para 11).

6. CORE ISSUE: The issue which was dealt by the Patna High Court was whether posting the SCN/Order under heading additional notices/orders would be proper service of the notices/orders as per Section 169 (para 18)

7. NOT EASILY ACCESSIBLE. The division bench of the Delhi High Court in another case has found that the category of additional notices/orders were NOT EASILY ACCESSIBLE.  The DELHI  High Court has quashed the adjudication order and directed proper officer to adjudicate the SCN based on the fresh reply to be furnished by the petitioner within 30 days from the date of the order (Para 20)

8. SUFFICIENT COMPLIANCE: The issue of whether sending a copy of the  communication posted on the portal by e mail to the registered e mail ID of the tax payer would be advisable as it facilitates the taxpayer to quickly get the attention, as he would not be in a position to check the notices on a daily basis in the portal, it was argued by Government that posting the issue in portal is sufficient compliance. The Patna High Court has not expressed any opinion on this and left it to the discretion of the Department (Para 25)

9. SET ASIDE: After discussing several issues at lengthy, The Patna High Court concluded that the order adjudicating a major demand amount of Rs.3.26 Crores (Including tax, interest and penalty) was required to be set aside and accordingly did it. The petitioner was given 4 weeks’ time for reply to SCN  (Paras 26 and 27).

10. First question: Is clause d of sub section 1 of section 169 is the ONE AND ONLY MODE to be uniformly adapted?  If so, what was the purpose behind clauses a,b and c.

11. Second question: What prohibits/prevents the GST Authorities from posting in NOTICES and ORDERS heading as against Additional notices and orders heading? (as they normally do)

12. Third question: Would it be a violation of law in case e mail is also sent in addition to posting in additional notices and orders heading?

13. Hardship: It appears that Government is not in a hurry to set up GSTAT even after the issue was highlighted by the Supreme Court in the case of TEAM COMPUTERS. As the GSTAT is not in place, the taxpayer who fail to notice the uploaded documents in the portal under additional notices/orders in time are left with no option other than knocking the doors of Jurisdictional High Courts. Apart from expenses of the taxpayer, the most important issue which is AVOIDABLE  IN NATURE is the number of writ petitions reaching various High Courts on identical issue arising out of Section 169 which substantially results in PRECIOUS TIME being used in avoidable issues.

14. Let the GOVERNMENT and GST Council voluntarily come forward to resolve this burning issue, as the Government  do not have any intention to create hardship to the tax payer.