GST order quashed and remanded due to SCN upload in wrong portal tab,

GST order quashed and remanded due to SCN upload in wrong portal tab, leading to denied hearing and appeal opportunity.

Issue:

Whether a demand order passed under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) should be quashed and the matter remanded, if the notice for hearing was improperly uploaded on the “Additional Notices Tab” of the GST portal (rather than the regular “Notices” tab), leading to the assessee missing the hearing and the order being passed without an opportunity of hearing, and if the subsequent appeal was also dismissed without a hearing.

Facts:

• An order was passed against the assessee under Section 74 of the CGST/UPGST Act, 2017 (dealing with demand involving fraud, wilful misstatement, or suppression of facts).
• The assessee contended that the notice for hearing was uploaded on the “Additional Notices Tab” on the GST portal instead of the standard “Notices” tab.
• Due to this improper uploading, the assessee claimed they could not notice the date of the hearing.
• The assessee further alleged that the date of hearing was fixed even prior to the date set for submitting a reply to the show cause notice.
• As a result, the impugned order was passed without granting the assessee an opportunity of hearing.
• A crucial additional fact was that the assessee’s subsequent appeal against this order was also dismissed without granting any opportunity of hearing.

Decision:

The court held in favor of the assessee. It found that no useful purpose would be served by relegating the assessee to the remedy of further appeal given the sequence of denied opportunities. Therefore, the impugned orders (both the original demand order and likely the appellate order) were quashed. The matter was remanded back to the assessing authority with a direction to pass a fresh order after giving a proper opportunity of hearing to the assessee.

Key Takeaways:

• Effective Service of Notice: The primary responsibility for effective communication of notices rests with the tax authorities. Uploading notices in a non-standard or obscure location on a portal, especially if it leads to the assessee genuinely missing critical deadlines, constitutes a failure of effective service.
• Violation of Natural Justice (Compounded): This case represents a compounded violation of natural justice. Not only was the original order passed without a proper hearing due to faulty notice delivery, but the subsequent appeal was also dismissed without a hearing. This makes the entire process patently unfair.
• Hearing Date Preceding Reply Date: Fixing a hearing date prior to the date for submitting a reply to the SCN is a severe procedural irregularity and a clear violation of the right to present a defense.
• Bypassing Appellate Remedy: While typically courts relegate parties to statutory appellate remedies, in cases of gross and repeated violations of natural justice, where pursuing further appeals would be futile or merely perpetuate injustice, High Courts readily exercise their writ jurisdiction to quash orders and remand for fresh adjudication. The phrase “No useful purpose could have been served in relegating assessee to remedy of appeal” is key here.
• Remand for Fresh Adjudication: The remedy provided is to quash the flawed orders and send the matter back to the initial authority for a fresh start, ensuring that all principles of natural justice are adhered to this time.
• Impact of Section 74: While Section 74 deals with cases involving fraud, etc., the procedural requirement of affording a proper hearing remains paramount, regardless of the nature of the alleged default.