HC Quashes Demand Order as Proper Notices Were Not Served, Breaching Natural Justice.

Issue

Is an assessment order passed under Section 73 of the CGST Act legally sustainable if the tax authorities failed to properly serve the mandatory statutory notices on the taxpayer, thereby passing an ex parte order in violation of the principles of natural justice?

Facts

The petitioner-taxpayer contended that for the assessment period of April 2020 to March 2021, they were never served with statutory notices, including the scrutiny notice in Form GST ASMT-10 or the show-cause notice in Form GST DRC-01.
They provided a screenshot of the GST portal’s notice tab showing “no records found” to support their claim.
The petitioner stated that although they had filed a reply (Form GST ASMT-11) to a scrutiny notice, they received no further communication before discovering an ex parte demand order on the portal.
The final assessment order passed by the authority made no mention of the ASMT-10 notice or the taxpayer’s ASMT-11 reply, indicating these were not considered.

Decision

The High Court quashed and set aside the impugned assessment order.
It held that the failure to serve proper notices and the passing of an ex parte order without considering the taxpayer’s reply amounted to a denial of a proper opportunity of hearing.
The court noted that the assessment order was defective because it failed to refer to the prior communications (ASMT-10 and ASMT-11), and this defect could not be cured later.
The matter was remanded back to the tax authority with a specific direction to serve all the necessary documents on the petitioner and allow them to file a comprehensive reply before proceeding afresh.

Key Takeaways

Natural Justice is Non-Negotiable: Passing an order without ensuring the taxpayer has received the show-cause notice and has been given a fair chance to respond is a fundamental violation of natural justice, making the order liable to be quashed.
Proof of Service is on the Department: The burden is on the tax department to demonstrate that notices were properly served. A taxpayer’s evidence, such as a portal screenshot showing no notices, carries significant weight.
Orders Must Be Self-Contained: An assessment order must be complete and reasoned. Its failure to even acknowledge prior notices and the taxpayer’s reply is a fatal flaw.
Procedural Compliance is Mandatory: The requirement to issue notices electronically as per departmental instructions is not merely a formality but a mandatory step for ensuring a valid proceeding.

HIGH COURT OF ORISSA

OLA Fleet Technologies (P.) Ltd.

State of Odisha

HARISH TANDON, CJ.
and M.S. Raman, J.

WP(C) No.17650 of 2025

SEPTEMBER 18, 2025

Sandeep Sachdeva and Mukesh Panda, Advs. for the Petitioner. Sunil Mishra, Standing Counsel and Seshadev Das, ASC for the Respondent.

ORDER

1. Assailed in the present writ petition is the Assessment order dated 21^st February, 2025 passed under Section 73 of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (collectively, “GST Act”) by the Assistant Commissioner of State Tax, Bhubaneswar-II Circle, Bhubaneswar-opposite party no.2 for the tax periods from April, 2020 to March, 2021.

1.1. The petitioner asserted that it was never served with notice in Form GST DRC-01. It is affirmed that the notices/intimation(s) were not uploaded on the GST Portal much less communicated by electronic mail to the petitioner.

2. Learned counsel appearing for the petitioner submitted that the input tax credit has been correctly disclosed in the monthly returns filed in Form GSTR-01 and Form GSTR-3B, yet the Department unilaterally disallowed the same without even affording opportunity of personal hearing.

2.1. He has taken this Court to a document at Annexure-4 of the writ petition, which reflects “no records found” against the menu— “intimations-notices”. Hence with vehemence the learned counsel submitted that there is flagrant violation of principles of natural justice inasmuch as the webportal itself shows that no notice or intimation was uploaded/attached.

2.2. An additional affidavit dated 15^th September, 2025 has come to be filed by the petitioner making statement therein that response was filed in Form GST ASMT-11, dated 1^st June, 2022 along with written statement to the notice in Form GST ASMT-10, dated 30^th March, 2022. It is further submitted by the learned counsel for the petitioner that the petitioner has not received any communication pursuant to scrutiny notice dated 30^th March, 2022 as is evident from the screenshot of the GST Portal as has already been mentioned above. However, on accessing the GST Portal, it has come to its knowledge that the demand order for the Financial Year 2020-21 has been passed ex parte and was uploaded in the said portal.

2.3. Referring to instruction No.04/2023-GST, dated 23^rd November, 2023 issued by the Ministry of Finance Department of Revenue, Central Board of Indirect Taxes and Customs GST Policy, it is submitted that non-issue of summary of notices/orders electronically in the portal is clear violation of explicit provisions of GST Rules.

2.4. It is, therefore, fervently prayed to allow this writ petition by granting opportunity to present the case on behalf of the petitioner before the assessing authority for fresh adjudication.

3. Having sought for obtaining instructions, learned Standing Counsel appearing for the Department-opposite parties furnished instructions received from the Joint Commissioner of CT & GST, Bhubaneswar-II Circle, Bhubaneswar. The said instruction contained the following:-

“***Another ASMT-10 issued on dtd-30/03/2022 vide Reference No-ZD210322018954Q for the F.Y.2020-21. The taxpayer has submitted his reply in ASMT-11 vide reference No-ZD2103220138954Q on dt 01/06/2022. However, the reply furnished by the tax payer is not found to be satisfactory and accordingly show cause notice u/2 73 of the OGST Act in Form GST DRC-01 vide Ref. No.ZD211024027876M/30/10/2024 was issued to the taxpayer fixing the date to 30/11/2024 for submission of reply in Form DRC-06. In this connection, the taxpayer has neither filed any reply nor complied the liability in any manner. Subsequently, two reminders issued to the taxpayer on dtd.18.01.2025 and 04.02.2025 respectively by fixing the date of reply on dtd.31.01.2025 and 12.02.2025 respectively as a principle of natural justice. In spite of getting three opportunities for personal appearance, the taxpayer never appeared before the adjudicating authority to discuss the irregularities nor submitted any relevant documents. Hence the Assessment Order U/s-73(9) is complete basing on the information available at this end, on dt.21/02/2025 by passing demand order in Form GST DRC 07 vide Ref. No.ZD2102250243524/ dtd.21/02/2025.

However, while issuing show cause notice in DRC-01 & passing the order in DRC-07 inadvertently the reference No-ZA210721000954U dtd-02/07/2021 was entered in the annexure to DRC-07.”

3.1. Though learned Standing Counsel vehemently objected to show indulgence in this matter, he conceded on the basis of instruction that certain inadvertent errors have crept in and that the instruction is silent with regard to the contention of the petitioner with respect to the following averment at paragraph-12 of the writ petition:

“12. That in this regard, in the intimation tab, Form GST-ASMT-10 has not been uploaded by the State tax authorities. Further, in the notices tab neither the SCN nor personal hearing notice has been uploaded by the State tax authorities, which makes it evident that intimation notice, SCN and personal hearing notices as alleged in the Impugned Order were never served on the Petitioner.”

4. Considered submissions diligently. On perusal of Annexure-4, it seems intimations/notices have not been delivered at the end of petitioner as the screenshot apparently shows “no records found”.

4.1. On bare reading of assessment order dated 21^st February, 2025 it is revealed that “the instant taxpayer has been intimated regarding the excess claim of input tax credit in GST ASMT-10 u/s.61 of OGST Act vide Reference No.ZA210721000954U dated 20/07/2021, wherein the tax payer was directed to reply in GST ASMT-11 by 02/08/2021. In this connection, the taxpayer has neither replied nor produced any supporting document against the findings communicated vide ASMT-10. Such lapse on the part of a registered taxpayer is unprecedented and amounts to ITC wrongly availed/utilized as contemplated u/s 73 of OGST Act”. Though there is no reference in the said assessment order with regard to GST ASMT-10, dated 30^th March, 2022 and GST ASMT-11, dated 1^st June, 2022, such fact is reflected in the instructions dated 12^th September, 2025 submitted by the learned Standing Counsel today during the course of hearing.

4.2. It is trite that no additional reason can sanctify the original order, which is defective. The instruction as placed before this Court depicts as if the authority concerned has considered the reply in ASMT-11, dated 1^st June, 2022 in connection with ASMT-10, dated 30^th March, 2022 and the same was found not satisfactory. Such a fact is not available in the assessment order.

5. Under the aforesaid premises, this Court is not satisfied that proper opportunity was not afforded to the petitioner, but an ex parte order was passed under Section 73 of the GST Act, which cannot be held to be sustained in the eye of law.

5.1. Since it is the case of the petitioner that it has not received in Form GST ASMT-10, which prevented him to file proper reply, the assessment order dated 21^st February, 2025 passed under Section 73 of the GST Act by opposite party no.2 is set aside and this Court does so.

5.2. This Court, therefore, disposes of the writ petition with direction to the authority concerned to serve proper documents, which are claimed to have not been served on the petitioner for filing its reply/explanation appropriately within a period of seven days from today. On such supply of documents, the petitioner may file reply/explanation within a period of two weeks thereafter. The assessing authority shall proceed with the matter for adjudication. It is directed the authority concerned shall concluded the entire proceeding by passing appropriate order taking into consideration the explanation/reply of the petitioner within a period of three months from date.

5.3. Needless to say, that the petitioner shall cooperate with the authority concerned and participate in the proceeding without seeking for unnecessary adjournments.

6. With the aforesaid observation and direction, this writ petition stands disposed of. As a result of the disposal of the writ petition, all pending Interlocutory Applications, if any, shall stand disposed of