High Court Quashes GST Recovery as Parallel Proceedings and Portal Only Notices Held Invalid

In a recent case before the Hon’ble High Court, the petitioner challenged recovery proceedings initiated by the State Goods and Services Tax Authorities, including a Recovery Notice and three Show Cause Notices (SCN) dated 12.01.2024, 23.02.2024, and 29.05.2024, and subsequently, three Orders-in-Original were passed against the petitioner. Aggrieved by this, the petitioner challenged the said SCN and the Orders by way of a writ petition filed before the High Court under Section 226 of the Indian Constitution.

The petitioner argued before the Court as follows:

(i) The Central GST department had already proceeded against the petitioner for the same assessment years and thus, the State GST proceedings by Section 6(2)(b) of the CGST Act were null and void, and

(ii) Since the petitioner’s GST registration was cancelled in 2021, service of notice merely by uploading them on the GST portal was invalid, and personal service was mandatory in such a case.

Issue Raised before the Court:

Whether State GST officials were empowered to issue recovery orders and show cause notices where CGST proceedings were pending, and whether service by upload on the portal alone after cancellation of registration was legally effective.

HC’s Decision:

The Court decided the issue in favour of the petitioner, holding the proceedings illegal on both grounds. It was held that the challenged show cause notices and orders were in contravention of Section 6(2)(b), and these notices initiated parallel proceedings where CGST action was already pending.

 The Hon’ble High Court held that once the registration of a firm is cancelled, posting of notices on the GST portal is not an effective service. Since no personal service was effected and the proceedings were held illegal under Section 6(2)(b), the court quashed both Recovery Notice and Orders-in-Original and, without going into the merits of the case and held that the notices were null and void.