High Court Allows Petition, Sets Aside GST Notice

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Case Name:

Neeraj Kumar (Trade Name) M/s ABM Pneumatics and Hydraulic Seals vs. Proper Officer SGST Ward -19 Zone - 2 (High Court of Delhi)

W.P.(C) 9425/2024, CM Nos.38661/2024 & 38662/2024

Date of Decision: 11 July 2024

Key Takeaways:

1. The High Court held that uploading a show cause notice under the "Additional Notices and Orders" section of the GST portal, instead of the "Notices and Orders" section, was not sufficient service under the CGST Act.

2. The court directed the GST authorities to re-design the portal to ensure that the "View Notices" tab and "View Additional Notices" tab are placed under a single heading.

3. The court remanded the matter to the adjudicating authority to consider the petitioner's response to the show cause notice and provide an opportunity to be heard.

Issue:

Whether the show cause notice issued to the petitioner was valid and not barred by limitation.

Facts:

- The petitioner, Neeraj Kumar, is the sole proprietor of a concern named ABM Pneumatics & Hydraulic Sales, registered with the GST authorities since July 1, 2017.

- The petitioner received a show cause notice dated September 28, 2023, under Section 73 of the CGST Act.

- The petitioner also challenged a notification that extended the time limit for passing an order under Section 73(9) of the CGST Act up to December 31, 2023.

Arguments:

- The petitioner argued that the show cause notice was not properly served as it was uploaded under the "Additional Notices and Orders" section of the GST portal, which was not easily accessible.

- The petitioner claimed that the show cause notice was barred by limitation.

- The respondents argued that uploading the notice on the portal was sufficient service under the CGST Act.

Key Legal Precedents:

- The court relied on the judgment in ACE Cardiopathy Solutions (P.) Ltd. v. Union of India (Neutral Citation No.2024:DHC:4108-DB), where the High Court had rejected the argument that uploading a notice under the "Additional Notices" section was sufficient service.

- The court also referred to the judgment of the Madras High Court in M/s East Coast Constructions and Industries Ltd. vs. Assistant Commissioner (ST), which had directed the GST authorities to address the issue of posting information under separate headings.

Judgment:

- The High Court allowed the petition and set aside the impugned order.

- The court remanded the matter to the adjudicating authority for fresh consideration, directing the petitioner to file a response to the show cause notice within two weeks.

- The court ordered the adjudicating authority to adjudicate the show cause notice after considering the petitioner's response and providing an opportunity to be heard.

FAQs:

Q1. What was the main issue in this case?

A1. The main issue was whether the show cause notice issued to the petitioner was valid and not barred by limitation.

Q2. Why did the High Court set aside the impugned order?

A2. The High Court set aside the impugned order because it found that the show cause notice was not properly served, as it was uploaded under the "Additional Notices and Orders" section of the GST portal, which was not easily accessible.

Q3. What did the High Court order the GST authorities to do?

A3. The High Court directed the GST authorities to re-design the portal to ensure that the "View Notices" tab and "View Additional Notices" tab are placed under a single heading.

Q4. What will happen next in this case?

A4. The matter has been remanded to the adjudicating authority for fresh consideration. The petitioner has been given two weeks to file a response to the show cause notice, and the adjudicating authority has been directed to adjudicate the matter after considering the petitioner's response and providing an opportunity to be heard.

Q5. What are the key legal principles established in this case?

A5. The key legal principles established in this case are:

- Uploading a show cause notice under the "Additional Notices and Orders" section of the GST portal is not sufficient service under the CGST Act.

- The GST authorities must ensure that all notices and orders are placed under a single, easily accessible section of the portal.

1. The petitioner has filed the present petition, inter alia, impugning an order dated 30.12.2023 (hereafter the impugned order) passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) pursuant to the show cause notice dated 28.09.2023 (hereafter the impugned SCN).

2. The petitioner also impugns the Notification No. 9/2023-Central Tax dated 31.03.2023 (hereafter the impugned notification), whereby the time limit specified under Section 73(10) of the CGST Act for passing an order under Section 73(9) of the CGST Act, inter alia, for the year 2017-18 was extended up to 31.12.2023. The impugned notification was issued in exercise of power conferred under Section 168A of the CGST Act.

3. The petitioner further claims that the impugned SCN is barred by limitation.

4. The petitioner is the sole proprietor of a concern named ABM Pneumatics & Hydraulic Sales and is registered with the GST Authorities since 01.07.2017. The petitioner was assigned the Goods and Services Tax Identification Number – 07ARTPK8063B1ZK.

5. The learned counsel for the petitioner submitted that the impugned SCN was uploaded on the portal in the category of ‘Additional Notices and Orders’ which were not easily accessible. It is contended that the show cause notices were required to be placed under the heading of ‘Notices and Orders’ but the same was not done.

6. The learned counsel for the parties submit that the issue involved in the present petition is covered by earlier decisions of this Court, including in ACE Cardiopathy Solutions (P.) Ltd. v. Union of India: Neutral Citation No.2024: DHC:4108-DB.

7. In the said decision, this Court had rejected the contention that uploading of a notice under the heading ‘Additional Notices’ would be sufficient service in terms of Section 169 of the CGST Act. The relevant extract of the said decision is set out below: -

“4. Learned counsel for respondent submits that in terms of Section 169 of the Central Goods and Services Tax Act, 2017, uploading of a notice on the portal is sufficient compliance with regard to intimation to the taxpayer.

5. We are unable to accept the contention of the learned counsel, reference may be had to the judgment of the High Court of Madras in W.P. No.26457/2023, titled M/s East Coast Constructions and Industries Ltd. vs. Assistant Commissioner (ST) dated 11.09.2023, wherein the High Court of Madras has noticed that communications are placed under the heading of “View Notices and Orders” and “View Additional Notices and Orders”. The Madras High Court had directed the respondents to address the issue arising out of posting of information under two separate headings. As per the petitioner, the Menu “View Additional Notices and Orders” were under the heading of “User Services” and not under the heading “View Notices and Orders”.

8. The GST Authorities have since addressed the issue and have redesigned the portal to ensure that ‘View Notices’ tab and ‘View Additional Notices’ tab was placed under one heading. However, it is not disputed that the impugned SCN was issued before the GST portal was re-designed.

9. In view of the above, the present petition is allowed and the impugned order is set aside.

10. The matter is remanded to the adjudicating authority for consideration afresh. The petitioner is at liberty to file a response to the impugned SCN within a period of two weeks from date.

11. The concerned authority shall adjudicate the impugned SCN after considering the petitioner’s response and after affording the petitioner an opportunity to be heard.

12. The present petition is disposed of in the aforesaid terms. All pending applications also stand disposed of.

VIBHU BAKHRU, J

SACHIN DATTA, J

JULY 11, 2024