Order Was Passed Without Granting A Personal Hearing, Contrary
To Section 75(4) Of The CGST Act – Madras High Court
1.
Introduction
The introduction of the
Goods and Services Tax (GST) was aimed at creating a seamless and
technology-driven tax ecosystem. However, the digital mode of communication
under GST—particularly through the GST portal—has repeatedly raised questions
about the effectiveness of service of notices. A recurring issue is
whether uploading notices on the portal alone is sufficient service, especially
when the taxpayer claims unawareness and does not respond.
The Madras High Court
has, in several rulings, emphasized that procedural compliance under GST must
not become a mere empty formality, but must ensure substantive
fairness. The recent case of Royal Office Mart vs. Deputy Commissioner
(ST) & Anr. is a clear example. Here, the Court quashed an ex-parte
assessment order passed solely on the basis of notices uploaded on the GST
portal, without ensuring effective communication or providing a personal
hearing.
This article analyses the
judgment in detail, exploring the facts, submissions, court’s reasoning, and
its broader implications on GST litigation.
2. Case
Details
- Case Name:
Royal Office Mart vs. Deputy Commissioner (ST) & Deputy State Tax
Officer
- Court:
High Court of Judicature at Madras
- Coram:
Hon’ble Justice Krishnan Ramasamy
- Writ Petition No.:
28857 of 2025 (with WMP Nos. 32369 & 32371 of 2025)
- Date of Judgment:
05 August 2025
- Petitioner:
Royal Office Mart, represented by its Proprietor, Bhavna Ben Bharat
Vaid
- Respondents:
1. Deputy
Commissioner (ST), GST Chennai-1, Greams Road, Chennai
2. Deputy
State Tax Officer, Chepauk Assessment Circle, Chennai
- Disputed Period:
FY 2019–20
- Impugned Order:
Demand order dated 13.08.2024 (Ref. ZD330824098347Y) under Section 73
CGST/TNGST Act, accompanied by DRC-07.
- Relief Sought:
Writ of Certiorari to quash the impugned demand order on grounds of lack
of effective service and denial of personal hearing.
3. Factual
Background
The petitioner, Royal
Office Mart, a proprietorship concern engaged in business at Chennai, was
assessed under the provisions of the CGST/TNGST Act, 2017. The respondent
authorities initiated proceedings for the tax period 2019–20 under Section
73, which deals with determination of tax not paid or short paid.
The department uploaded
all show cause notices and communications under the “View Additional
Notices and Orders” tab of the GST common portal. The petitioner, however,
claimed unawareness of these notices and, consequently, failed to file replies
within the prescribed timelines.
Subsequently, the
respondent passed an impugned assessment order dated 13.08.2024,
confirming the proposed demand. This order was also uploaded on the GST portal,
along with a summary order in DRC-07, crystallizing the liability.
The petitioner contended
that the order was passed without:
- Effective service of the SCN, and
- An opportunity of personal hearing.
Thus, they approached the
Madras High Court under Article 226, challenging the order as violative of Section
75(4) of the CGST Act and principles of natural justice.
4.
Submissions of the Petitioner
Counsel for the
petitioner, Mr. P. Vikramkumar, put forth the following arguments:
1. Lack
of Awareness of Notices
o All
notices were uploaded on the GST portal, but no separate communication was
issued.
o The
petitioner was not aware of the notices, hence could not respond in time.
2. Violation
of Natural Justice
o The
order was passed without granting a personal hearing, contrary to Section
75(4) of the CGST Act.
o This
amounted to denial of the fundamental principle of audi alteram partem
(hear the other side).
3. Offer
of Payment
o The
petitioner expressed willingness to pay 25% of the disputed tax as a
condition for remand, demonstrating bona fides and intent to cooperate.
4. Prayer
for Relief
o Quash
the impugned order and remand the matter for fresh adjudication with an
opportunity of hearing.
5. Defence
by the Respondents
On behalf of the
respondents, Mr. C. Harsha Raj, Special Government Pleader (Taxes),
submitted:
1. Compliance
through GST Portal
o The
department had uploaded all notices on the GST portal, which is a statutorily
recognized mode of service under Section 169 of the CGST Act.
2. Admission
of No Hearing
o He
fairly admitted that no opportunity of personal hearing was provided before
passing the impugned order.
3. Support
for Remand
o In
view of the petitioner’s willingness to deposit 25% of the disputed tax, he
suggested that the matter may be remanded for fresh consideration subject to
this payment.
6.
Observations of the Court
Justice Krishnan Ramasamy
made detailed observations, focusing on two crucial aspects—effective
service of notice and right to hearing:
1. Service
Through Portal is Not Always Effective
o While
uploading notices on the GST portal is legally valid under Section 169, it may
not amount to effective service if the taxpayer fails to respond.
o In
such cases, officers should explore alternate modes of service, such as Registered
Post with Acknowledgment Due (RPAD), to ensure effective communication.
2. Empty
Formalities vs. Substantive Fairness
o Passing
an ex-parte order solely on the ground of portal service amounts to fulfilling
“empty formalities.”
o Such
mechanical compliance defeats the object of the Act and burdens appellate
forums with avoidable litigation.
3. Right
to Hearing is Fundamental
o Since
the impugned order confirmed the proposals in the SCN, it was undoubtedly
adverse to the petitioner.
o Therefore,
Section 75(4) mandated granting a personal hearing. The failure to do so
rendered the order invalid.
4. Balancing
Revenue and Fairness
o While
the State has a legitimate interest in protecting revenue, fairness cannot be
sacrificed.
o The
petitioner’s willingness to deposit 25% of the disputed tax was considered a
fair balance between revenue protection and taxpayer rights.
7. Final
Judgment
The High Court allowed
the writ petition, issuing the following directions:
1. Impugned
Order Quashed
o The
demand order dated 13.08.2024 was set aside.
2. Conditional
Remand
o The
matter was remanded to the respondent for fresh adjudication, subject to the
petitioner depositing 25% of the disputed tax within four weeks.
o The
quashing of the order would take effect only upon payment of this amount.
3. Timelines
for Further Proceedings
o Petitioner
to file reply/objection with documents within three weeks of payment.
o Respondent
to issue 14 days’ clear notice fixing a personal hearing, then pass a
reasoned order on merits in accordance with law.
4. Costs
o No
costs were imposed. Connected miscellaneous petitions were closed.
8.
Conclusion and Implications
The decision in Royal
Office Mart vs. Deputy Commissioner (ST) underscores vital lessons for both
taxpayers and the department:
1. Effective
Service Matters
o Authorities
cannot blindly rely on uploading notices on the GST portal. If no response is
received, alternate modes under Section 169 must be explored.
2. Hearing
is Non-Negotiable
o Before
confirming demands, a personal hearing is mandatory under Section 75(4).
Failure to grant it makes the order unsustainable.
3. Balance
Between Revenue and Justice
o Courts
may impose conditions (such as partial deposit) to balance revenue interests
while ensuring fairness.
4. Judicial
Consistency
o This
case aligns with earlier rulings such as Sindhu Enterprises, Fathima
Agencies, and Seetu Fan House, reinforcing the judiciary’s
commitment to procedural fairness under GST.
5. Message
to Tax Authorities
o Officers
must act not only as revenue enforcers but also as quasi-judicial authorities,
respecting statutory safeguards.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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