Court Directs GST Department to Formulate SOP Amidst Procedural Inconsistencies
Issue
- Whether a demand order is valid if procedural prerequisites, such as pre-notice consultation and proper uploading of the Show Cause Notice (SCN), are not followed by the tax authorities?
- What is the legal standing of a demand order that is manually signed within the limitation period but where the corresponding summary in Form DRC-07 is uploaded to the GST portal after the deadline has expired?
- Whether recurring procedural inconsistencies and deviations by GST authorities warrant judicial intervention to mandate the creation of a Standard Operating Procedure (SOP)?
Facts
The assessee challenged a demand order, raising several procedural and jurisdictional objections. It was contended that the order was passed without a pre-notice consultation and that the Show Cause Notice (SCN) was never uploaded to the portal.
A key argument was that the order was time-barred. The assessee submitted that the demand order was effectively issued on May 5, 2024, when Form DRC-07 was uploaded, which was beyond the deadline of April 30, 2024, stipulated by Notification No. 56/2023-CT for the relevant financial year. In response, the department presented the order, showing it was manually signed by the officer on April 30, 2024, within the limitation period. This created a factual dispute regarding the actual date of issuance of the order – the date of signing versus the date of uploading to the portal.
The Court noted that this was one of several cases where such procedural issues and inconsistencies on the part of the GST department had been observed.
Decision
The High Court, taking cognizance of the broader issue of procedural lapses, issued an interim order providing immediate relief to the assessee and setting a course for systemic improvement.
- Interim Relief: The Court directed that no coercive action be taken against the assessee in the meantime.
- Systemic Rectification: Recognizing the recurring nature of these procedural problems, the Court decided to list the matter for further hearing to address the root cause. It directed the GST department to create a proper Standard Operating Procedure (SOP) to ensure a consistent and uniform practice is followed by all officers in the future.
- Accountability: The Court ordered the department to file an affidavit detailing the facts of the present case and the steps being taken to formulate the SOP. This ensures departmental accountability and a formal commitment to rectifying the inconsistencies.
Key Takeaways
- Order Date vs. Upload Date: A discrepancy between the manual signing date of an order and the date of its upload on the GST portal can create a valid dispute regarding whether the order was issued within the statutory limitation period. The effective date of communication to the taxpayer is crucial.
- Judicial Scrutiny of Procedural Lapses: Courts are increasingly taking serious note of the failure of GST authorities to follow prescribed procedures, such as pre-notice consultations and proper service of notices and orders.
- Mandating SOP for Consistency: When faced with repeated instances of inconsistent practices and procedural errors by a government department, High Courts can exercise their writ jurisdiction to direct the formulation of a binding Standard Operating Procedure (SOP) to ensure fairness, transparency, and uniformity.
- Interim Protection: In cases where there is a prima facie case of procedural irregularity or a violation of natural justice, courts are inclined to grant interim protection to the assessee, such as staying coercive recovery actions, pending a final decision.
HIGH COURT OF DELHI
Khaleeque Ahmed
v.
Superintendent CGST
PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.
W.P. (C) No. 6488 of 2025
CM APPL. No. 29568 of 2025
CM APPL. No. 29568 of 2025
MAY 16, 2025
Monis Khan and Wahaj Ahmad Khan, Advs. for the Petitioner. Ms. Monica Benjamin, SSC and Ms. Nancy Jain, Adv. for the Respondent.
ORDER
Prathiba M. Singh, J.- This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner- Khaleeque Ahmed, proprietor of M/s Mark Ad Grafix under Article 226 of the Constitution of India, inter alia, assailing the order bearing reference no. ZD070524002517M dated 5th May, 2024 (hereinafter ‘impugned order’) passed by the Respondent No. 1- Superintendent, CGST, Range-163, Ward-94, Zone 9, New Delhi.
3. There are two issues that are raised in the present petition:
| (i) | Firstly, that the Show Cause Notice dated 29th November 2023 was not communicated to the Petitioner at all; |
| (ii) | Secondly, that the impugned order was issued on 5th May, 2024 beyond the date fixed in Notification No.56/2023-Central Tax dated 28th December, 2023. |
4. Yesterday i.e., 15th May, 2025, when the matter was listed, Ms. Benjamin, ld. Senior Standing Counsel for the Respondent had accepted notice and sought time to take instructions. Ld. Senior Standing Counsel has obtained the comments from the Department. As per the Department, the Show Cause Notice was not uploaded on the portal. The pre-notice consultation was also dispatched on 16th October, 2023 and the Show Cause Notice was dispatched on 29th November, 2023. However, ld. Senior Standing Counsel concedes that the two documents were not uploaded on the portal.
5. Moreover, the ground that has been raised by the Petitioner is that the impugned order is beyond the limitation as it has been uploaded only on 5th May, 2024 whereas the last date in terms of Notification No.56/2023-Central Tax is 30th April, 2024.
6. A perusal of the hard copy of the impugned order which has been handed across by the Petitioner shows that the same was signed on 30th April, 2024 but the Form DRC-07 was uploaded on 5th May, 2024.
7. In a number of matters relating to the GST Department, there are certain procedural issues that the Court has noticed:
| (i) | Firstly, that the communications and notices are not duly uploaded on the portal or sent by email. They are only sent by speed post. |
| (ii) | There is no consistency in the practice being followed by the GST Department. |
8. Accordingly, it is deemed appropriate to direct that the GST Department ought to create a proper SOP for following a consistent practice of:
| (a) | Uploading all notices, orders and communications on the portal; Secondly – by sending all such communications, notices and orders through email on the registered email address; Finally -the said correspondence could also be sent by speed post; |
| (b) | In respect of lack of signatures and DIN Numbers on SCNs and on the Orders-in-Original, the Department ought to ensure that the name of the Officer, the digital signature or the physical signature along with the date and the DIN Number ought to be made available on all the SCNs and orders that are passed. |
| (c) | One of the grievances usually raised is that there is no consistency between the date of the order and the date when it was uploaded/issued on the portal. Grievances are thus raised as to the date on which the order itself is passed. The GST Department should make an endeavour to ensure that on the date when the order is passed, it is uploaded on the very same day. |
9. Let a short affidavit be filed by the Department both on the facts of this particular case and in respect of the SOP as directed above.
10. In the meantime, no coercive steps shall be taken.
11. At this stage, Ms. Benjamin submits that the GST Department has a published protocol and GST officials are bound to comply with the protocol as mandated. Let the said existing protocol, if any, be considered in the light of the above directions and if any changes need to be made or if one SOP needs to be prepared and issued comprehensively covering all the above issues, the same be done.
12. List on 8th August, 2025.