Demand Order Quashed: Non-Upload of Order on Portal and Lack of Proper Communication Violates Natural Justice

Demand Order Quashed: Non-Upload of Order on Portal and Lack of Proper Communication Violates Natural Justice

Issue:

Whether a demand order (DRC-07) and its preceding proceedings are valid if the order is not uploaded on the GST portal or properly communicated to the assessee via email, thereby denying the assessee knowledge of the order and violating principles of natural justice.

Facts:

For the period 2017-18, the assessee challenged a summary of order, summary of show cause notice (SCN), and proceedings initiated subsequent to an inspection conducted at the assessee’s premises in his absence. The assessee contended that after the inspection, an inspection report was allegedly prepared, and they were directed to appear before the respondent authority with records. However, the assessee could not appear due to a family ailment.

Crucially, the assessee contended that before the issuance of DRC-07 (the demand order), they did not receive DRC-01 (the show cause notice for demand) online. The assessee pointed out that an e-mail was indeed issued to them on the same date on which Form GST DRC-07 was issued, asking the assessee to access their dashboard on the portal to view/download/print the order. However, there was no attachment of the order to that e-mail.

The respondents (department) submitted that the order had been passed/issued by following the provisions and procedures of the JGST Act, but they nowhere stated that the said order had actually been uploaded on the portal.

Decision:

The court ruled in favor of the assessee. It held that it was the duty of the respondents, who had passed the impugned order, to upload it on the portal or communicate it to the assessee via the assessee’s e-mail. In light of the docket proceedings of the respondent authority, which indicated that DRC-07 was not uploaded on the very same day as the email intimation, and in the absence of any statement by the respondents as to when it was actually uploaded, there had been a violation of the principles of natural justice on account of the non-supply of the said order. Therefore, the writ petition was allowed.

Key Takeaways:

• Effective Communication of Orders: For an order creating a demand or having adverse consequences to be valid, it must be effectively communicated to the assessee. Mere issuance or internal recording is insufficient if the assessee does not have proper knowledge.
• Department’s Duty to Upload/Communicate: It is the explicit duty of the tax authorities to ensure that their orders are properly uploaded on the designated portal or directly communicated to the assessee via email with the order attached, as per statutory provisions (e.g., Section 169 of CGST Act on service of notice).
• Violation of Natural Justice: The failure to provide the assessee with actual knowledge of the demand order (by not uploading it or attaching it to an email) constitutes a violation of the fundamental principle of natural justice, as the assessee is denied the opportunity to respond or avail remedies within the prescribed time.
• Burden of Proof on Department: When the assessee claims non-receipt or lack of knowledge, the burden shifts to the department to prove that the order was duly served/communicated in accordance with law. A vague assertion that procedures were followed is not enough.
• Docket Proceedings as Evidence: The court’s reliance on the department’s own “docket proceedings” to determine the actual upload date (or lack thereof) highlights the importance of accurate internal records and their potential use in judicial review.
• Consequences of Procedural Failure: Such a fundamental procedural failure leads to the quashing of the impugned order, giving the assessee relief and ensuring due process.