Notice by affixation can be resorted if Other Modes are not Practicable: Allahabad HC Quashes Order of cancellation of GST Registration [Read Judgment]

In an assessee-favour ruling, the Allahabad High Court has held that the ‘Notice by Affixation’ cannot be treated as a proper service if the Revenue had tried all the other modes of service of notice under section 169 of the Central GST Act is attempted by the Revenue.

While allowing a petition, the bench comprising Justice Pankaj Mithal and Justice Ashok Kumar also held that the cancellation of GST registration merely on the basis of a prima-facie opinion that the business of the assessee is closed is violation of the principles of natural justice.

In the instant case, the revenue cancelled the GST registration of the petitioner on the ground that the petitioner is not carrying any business as his business place is lying closed.

The petitioners argued before the Court that  the aforesaid order is in violation of principles of natural justice inasmuch as the show-cause notice alleged to have been issued to the petitioner on 18.01.2018 was never sent in any proper mode as prescribed under the Act and was not served upon the petitioner.

Secondly, it has been contended that only on prima-facie satisfaction that the petitioner is not carrying any business without coming to any final conclusion thereof, the registration of the petitioner has been cancelled.

The bench observed that the notice under the Act is required to be served in accordance with the provisions of Section 169 of the Act which provides that it can be served by giving or tendering it directly or by messenger to the person concerned or to a person regularly employed by him in connection with his business or to an adult member of the family residing with him; or by registered or speed post or courier with acknowledgement due by sending at the last known place of business or residence of the person concerned; or by sending a communication at its email address provided at the time of registration and amended from time to time; or by making it available on the common portal; or by publication in a newspaper circulating in the locality in which the person concerned has last resided or carried business; or if none of the modes aforesaid is practicable, by affixing it at some conspicuous place, of his last known place of business or residence. It is only if the mode of service as provided in the earlier parts of Section 169 are not practicable that the authorities can resort to service of notice by affixation. In this regard the words “if none of the modes is practicable” are relevant and important.

“The use of the aforesaid words clearly indicates that it is only after the authorities are satisfied that all earlier methods are not practicable for service of notice that resort can be taken for service of notice by affixation. In the present case, we do not find that the Assistant Commissioner had come to any conclusion that all previous modes as prescribed under Section 169 are not practicable for the service of notice and has directly resorted to service by affixation. In such a situation, service if any by affixation cannot be regarded as a proper service,” the Court said.

Allowing the petition, the Court further said that “we are of the definite opinion that the petitioner was not served with any show-cause notice before passing of the impugned order and service through affixation could not have been resorted to in the facts and circumstances of the case. The order impugned, therefore, is in violation of the principles of natural justice. Apart from the above, a bare reading of the impugned order dated 27.01.2018 discloses that it has been passed only on the basis of prima-facie opinion and the material on which such a prima-facie opinion was formed has not been indicated. The Assistant Commissioner could not have passed the order on the basis of prima-facie opinion until and unless he was of a definite opinion that the petitioner has closed down the business.”