Ex-Parte Order Set Aside as Officer Failed to Use Alternative Notice Service Methods After Portal Upload

Ex-Parte Order Set Aside as Officer Failed to Use Alternative Notice Service Methods After Portal Upload

 Issue

The central issue is whether an ex-parte assessment order is legally valid if the preceding show cause notice was only served by uploading it to the GST portal, and the officer made no further attempts to serve it through other means when no response was received from the taxpayer.

 Brief Facts

The GST department issued a show cause notice to the assessee by simply uploading it to the GST portal. The assessee, being unaware of the notice, did not respond. Subsequently, the department passed an assessment order on an ex-parte basis, without providing an opportunity for a personal hearing to the assessee. The assessee challenged this order on the grounds of violation of principles of natural justice.

 Decision

The court ruled in favor of the assessee, setting aside the ex-parte order and remanding the matter for fresh consideration.

The court observed that merely fulfilling an “empty formality” of uploading a notice does not serve the purpose of the law, which is to ensure a fair hearing. It held that when there is no response from a taxpayer to a notice sent through a particular mode (like the portal), the officer should explore alternative modes of service as prescribed in Section 169(1) of the CGST Act. The court specifically recommended using Registered Post with Acknowledgement Due (RPAD) as a preferable and more effective method to ensure the notice is actually served.

 Key Takeaways

• Effective Service is Crucial: The responsibility of the tax officer is not just to issue a notice but to ensure it is effectively served. The principles of natural justice demand it.
• Duty to Use Alternative Modes: If a notice sent via one method (e.g., portal upload) elicits no response, the officer should make a reasonable effort to use other prescribed methods to contact the taxpayer.
• RPAD as a Preferred Method: Registered post is a reliable method that provides proof of delivery and helps prevent litigation arising from claims of non-receipt of notices.

Disallowance of ITC Under Section 16(4) Quashed Based on Binding Precedent

 Issue

The issue is whether the disallowance of an Input Tax Credit (ITC) claim for being time-barred under Section 16(4) of the CGST Act is legally sustainable.

 Brief Facts

The assessee’s claim for Input Tax Credit (ITC) was rejected by the department. The sole ground for the rejection was that the claim was filed beyond the time limit prescribed in Section 16(4) of the CGST Act and was therefore time-barred.

 Decision

The court ruled in favor of the assessee and quashed the disallowance of the ITC claim.

The court did not undertake a fresh examination of the legal provisions. Instead, it relied on the principle of judicial precedent, noting that the exact same issue had already been decided in a previous common order in the case of Sri Ganapathi Pandi Industries v. Assistant Commissioner (State Tax). As the issue was already covered by a binding precedent of the same court, the disallowance was summarily quashed.

 Key Takeaways

• Power of Precedent: This case highlights the importance of judicial precedent (stare decisis). A ruling on a point of law by a court becomes binding for all subsequent similar cases within its jurisdiction.
• Consistency in Law: Following precedents ensures consistency, predictability, and fairness in the application of tax laws.
• Section 16(4) Under Scrutiny: This ruling is one among many where various High Courts have provided relief to taxpayers against the strict application of the time limit for claiming ITC under Section 16(4), often reading it as procedural rather than mandatory.