High Court: GST Demand Set Aside for SCN Service Defect

The assessee, a GST-registered footwear manufacturer, challenged a Show Cause Notice and the resulting demand order dated 15.04.2024, imposing a tax liability of Rs. 32.44 lakh for FY 2018-19. The petitioner argued that the SCN was never properly served, having been uploaded only under the ‘Additional Notices‘ tab of the GST portal without any email or SMS alert, resulting in an ex-parte assessment and denial of the opportunity to respond.

The petitioner also raised a constitutional challenge to the Notifications, which extended the limitation period for GST actions. These notifications are already under consideration before the Supreme Court, and the petitioner sought relief on the ground that the demand proceedings were initiated during the extended period.

Issue Raised: If the SCN was not sufficiently communicated, could the demand order be upheld, and should the case be remanded in view of the ongoing Supreme Court case regarding the extension of the statute of limitations?

Court’s Ruling: The High Court allowed the petition and quashed the demand order. It was decided that the requirement of effective communication is not met by simply uploading the SCN to a non-prominent area of the portal without giving adequate notice via email or SMS. The Court noted that such procedural errors lead to the denial of natural justice, citing similar precedents.

The Court remanded the case so that the petitioner could respond by July 25, 2025. Before issuing a new order, the Adjudicating Authority was instructed to send out a new hearing notice via the portal and other channels, like phone or email. It further explained that the validity of the notifications extending the limitation is still up for debate and that the Supreme Court’s ruling in the ongoing SLP will determine any final ruling.

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