Madras HC Quashes GST Assessment and Appellate Order for Portal-Only Notice; Fresh Hearing on 25% Deposit

In a recent ruling, the Madras High Court granted relief to a company by cancelling the order that was passed without giving an opportunity for a personal hearing. In this case, the petitioner company, Mr. V. Arun, Proprietor of Ms. Sri Subramani Traders, filed a writ petition in the High Court of Madras to challenge two orders. One was an ex parte order, and the other resulted from the rejection of an appeal filed by the company against the first order.

The petitioner first received a show cause notice dated 07.05.2024, followed by reminders dated 14.06.2024 and 26.06.2024 on the GST Portal. As per the company, the notices were uploaded on the GST portal, and the physical copies were not served. Therefore, the company was unaware of the notices and could not file a response. Due to this, the tax officer passed the final order on 08.07.2024. As per the company, the final order was passed without giving a chance for a personal hearing, which clearly violated the principles of natural justice. The petitioner stated that it filed an appeal to the GST appellate authority, but the same was rejected in an order dated 25.03.2024, saying that the appeal was filed late.

The petitioner claimed that it had already paid 10% while filing the appeal, and if the court sets aside the order and remands it to the tax authority, the company is willing to pay 15% of the disputed tax.

The High Court observed that sending notices on the GST portal is valid but not effective if the taxpayer does not respond to the notices. In such a case, the officer should apply his mind and explore other ways to issue notice under Section 169(1), preferably by way of RPAD. Therefore, the court set aside the order and the order passed by the GST appellate authority. The matter is remanded to the tax authority for fresh consideration, and the court gave the following directions:

• The company is allowed to pay 15% of the disputed tax within two weeks.
• The company must submit its reply and documents within two weeks.
• The respondent must issue a 14-day notice after considering the reply of the company and give it an opportunity for a personal hearing, and then decide the matter.