High Court Strikes Down GST Demand Over Defective SCN & Violation of Natural Justice
High Court Strikes Down GST Demand Over Defective SCN & Violation of Natural Justice
A petition is presented against the ex parte order issued by the Deputy Commissioner, State Tax, under Section 73(9) of the BGST Act, 2017, for the year 2019-20, along with the notice of demand in Form GST DRC-07. It was the case of the petitioner that the order was passed without compliance with Sections 75(4) and 169 of the BGST Act. It was submitted that uploading of the show cause notice only under the heading “Additional Notices and Orders” on the GST portal could not be treated as a valid service, and that the notice merely mentioned the last date for filing reply but did not specify any date, time or place of personal hearing. The petitioner contended that this amounted to a violation of the procedure prescribed and principles of natural justice. It was also stated that on the basis of the ex parte order, a demand of Rs. 7,21,819/- was raised, including tax, interest and penalty, and the bank account of the petitioner was attached for recovery.
The respondent contended that a show cause notice dated 21.05.2024 had been sent and placed on the portal, which is a legal method of service under Section 169, and the petitioner was obligated to look up the portal regularly.
Main Issue: Whether the ex parte order of assessment dated 28.08.2024 for FY 2019-20 could be upheld in the light of claimed invalid service under Section 169 and non-service of mandatory personal hearing under Section 75(4) of the BGST Act, 2017.
HC’s Decision: The Court ruled that putting up the notice only under the title “Additional Notices and Orders” on the GST portal was not in line with the laid-down procedure, and hence service could not be considered valid. It was also discovered that no personal hearing was made available as required under Section 75(4), as the notice specified merely the due date for filing reply and not date, time and place of hearing. The Bench observed that such shortfalls rendered the order of assessment unsustainable in law, being violative of statutory rules and principles of natural justice. The said order of assessment dated 28.08.2024 and consequential demand raised vide Form DRC-07 were, therefore, set aside.
The Court allowed liberty to the petitioner to submit a detailed reply within two weeks to the Assessing Officer. It was directed that if, after considering the reply, the authority proposed to take an adverse view, then a proper personal hearing must be granted by fixing a date, time and place, and thereafter a reasoned order must be passed strictly in accordance with law. The Court directed that the entire process be completed within a period of three months. With these directions, the writ petition was allowed and disposed of.
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