Ex-Parte GST Order Quashed Due to Consultant’s Oversight & Portal Issues
Issue
Whether an ex-parte GST adjudication order is sustainable when the taxpayer failed to file a reply or attend the personal hearing due to an oversight by their previous consultant and lack of direct access to the GST portal, thereby denying them an effective opportunity to be heard.
Facts
Assessee: Walsons Services (P.) Ltd.
Period: April 2019 to March 2020.
The Default: The Adjudicating Authority issued a Show Cause Notice (SCN) and a reminder, fixing a date for a personal hearing.
Non-Compliance: The petitioner failed to file a reply and did not attend the scheduled hearing.
Reason for Default: The petitioner contended that the non-compliance was unintentional. It was attributed to an oversight by their previous consultant and the petitioner’s inability to access the GST portal directly to view the notices.
The Order: Consequently, the Authority passed an ex-parte order confirming the tax demand.
The Challenge: The petitioner filed a writ petition challenging the order on grounds of violation of natural justice. Additionally, they challenged the vires (legal validity) of certain GST notifications (likely regarding limitation extensions).
Decision
The Delhi High Court disposed of the writ petition in favour of the assessee by way of remand.
Breach of Natural Justice: The Court noted that although notices were issued, the petitioner did not effectively participate due to the cited reasons (consultant’s oversight). Confirming a demand without a defense violates the principles of natural justice.
Remand: The impugned order was set aside. The matter was remanded to the Adjudicating Authority for de novo (fresh) adjudication.
Directions: The petitioner was directed to file a reply to the SCN, and the Authority was ordered to pass a fresh order after affording a personal hearing.
Limitation Challenge: Regarding the challenge to the validity of the GST notifications, the Court held that the fresh order passed upon remand would be subject to the outcome of the pending Special Leave Petition (SLP) before the Supreme Court on this specific legal issue.
Key Takeaways
Consultant’s Negligence Condoned: High Courts frequently exercise discretionary jurisdiction to set aside orders where the taxpayer’s default is attributed to the negligence or oversight of their professional representatives, preferring a decision on merits.
Effective Opportunity: An opportunity to be heard must be real and effective. If a taxpayer misses it due to genuine difficulties (like portal access issues), courts often reset the clock.
Protective Litigation: By keeping the challenge to the notifications “open,” the petitioner ensures that if the Supreme Court later strikes down the limitation extension notifications, the demand against them will automatically collapse, regardless of the remand outcome.