Madras HC Conditionally Sets Aside KBS Motors’ GST Order Over Portal-Only Notice, Requiring 25% Deposit before Reconsideration

In brief

The question

Whether the assessment order should be set aside where the petitioner claimed not to have received the show-cause and personal-hearing notices and was not afforded an effective opportunity to be heard.

The court held

The Court set aside the order dated 19 August 2024, conditional on the petitioner depositing 25% of the disputed tax within four weeks of receiving the Court’s order, after deducting any amount paid after the assessment order.

It also directed

The petitioner must file a reply with supporting documents within two weeks thereafter.

On receipt, the respondent must issue 14 days’ clear notice fixing a personal hearing, consider the reply, hear the petitioner, and pass fresh orders on the merits and in accordance with law as expeditiously as possible.

The writ petition was disposed of without costs; the connected miscellaneous petitions were dealt with as stated in the order.

01Facts

The petitioner challenged the respondent’s order dated 19 August 2024 under Section 73 of the TNGST Act, 2017, and the related GST DRC-07 summary.

p. 1

The petitioner contended that the show-cause notice and personal-hearing notice were uploaded only on the GST Portal, that no physical copies were served, and that the petitioner was unaware of the proceedings.

pp. 1–3

The petitioner sought reconsideration after an opportunity to respond and offered to deposit 25% of the disputed tax demand.

pp. 1–3

The respondent did not oppose remand on that condition.

pp. 1–3

The Court found that the show-cause notice had been uploaded on the Portal and that the petitioner had not submitted a response.

p. 4

02Issues

i.Whether the assessment order should be set aside where the petitioner claimed not to have received the show-cause and personal-hearing notices and was not afforded an effective opportunity to be heard.

pp. 2–4

ii.Whether the matter should be remanded subject to the petitioner depositing 25% of the disputed tax demand.

pp. 3–5

03Law Applied

The proceedings arose under Section 73 of the TNGST Act, 2017, and the Court exercised its jurisdiction under Article 226 of the Constitution of India.

p. 1

The Court applied the principles of natural justice, including the requirement to afford a meaningful opportunity to respond and be heard before making an adverse determination.

p. 4

It also stated that where the statute provides alternative modes of service, the authority should adopt an effective mode rather than repeatedly relying on uploads to the common portal when no response is received.

p. 4

Provisions in the judgment · 1

Tamil Nadu Goods and Services Tax Act, 2017 Section 73

04Reasoning

The Court accepted that the notices had been uploaded to the GST Portal but noted the petitioner’s claim that no physical copy was served and that the petitioner was unaware of the notice.

p. 4

Given the absence of a response and the availability of alternative modes of service, the respondent should have adopted an effective mode of service.

p. 4

The Court concluded that the order had been made without affording the petitioner an opportunity of personal hearing, thereby violating natural justice, and that reconsideration on the merits was warranted.

p. 4

The petitioner’s offer to deposit 25% of the disputed tax, which the respondent accepted as a condition for remand, supported the terms of relief.

pp. 3–5