GST Department Not at Fault for Not Providing Physical Copy of SCN Once Uploaded in Portal: Madras HC [Read Order]

The Madras High Court recently ruled that the Goods and Services Tax ( GST ) department is not at fault for failing to provide a physical copy of a Show Cause Notice ( SCN ) once it has been uploaded on the common GST portal.

The bench of Justice Krishnan Ramasamy stated that “Once, the show cause notice was uploaded in the common portal, the petitioner ought to have filed a reply within a stipulated time. The petitioner cannot blame the Department for not furnishing a physical copy.”

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This case arose following the issuance of notices by the GST department regarding discrepancies in tax liabilities for the financial years 2017-2018 through 2021-2022. In September 2023, the GST department issued orders demanding payment of the differential amount for these assessment periods.

The petitioner had responded to an initial notice, Form DRC-01A, uploaded on January 27, 2023, but failed to reply to the subsequent Form DRC-01 issued in June 2023, claiming lack of awareness due to non-receipt of a physical copy.

Consequently, the GST department issued ex-parte orders on September 13, 2023, leading to the attachment of the petitioner’s bank account and the withdrawal of ₹1.45 crore from an assessed liability totaling ₹11.20 crore.

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In defense, the petitioner argued that an oversight by his accountant resulted in the non-submission of a reply and requested the court for a chance to file a reply and be heard in the proceedings.

However, the respondent's counsel argued that the petitioner was obligated to monitor updates on the GST portal, and any failure to respond was the petitioner's responsibility, not the department’s.

Along with criticising the petitioner, the Madras High Court also observed that, while it was ultimately the petitioner’s responsibility to respond to the notice, the petitioner’s plea that their accountant had failed to inform them or appear before the authority was taken into consideration. This failure resulted in an ex-parte order against the petitioner.

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Recognizing that this omission led to a decision made without the petitioner’s participation, the Court concluded that the principles of natural justice were not upheld. Therefore, the Court decided that the petitioner should be given an opportunity to file an appropriate reply and attend a personal hearing before the concerned authority.

Thus, it directed the petitioner to file their reply within two weeks of receiving this order, after which the GST department should provide a 14-day notice for a hearing, thereby allowing the petitioner a fair chance to address the assessment discrepancies. The writ petitions were disposed of accordingly.

To Read the full text of the Order CLICK HERE

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