Taxpayer Cannot be Penalised for ‘Invisible’ GST Notices: Calcutta HC Restores Right to Reply for Birla Brothers [Read Order]

The Calcutta High Court has ruled that a taxpayer cannot be penalised for failing to respond to GST ( Good and Services Tax ) proceedings when statutory notices are “invisible” on the GST portal, having been uploaded in a manner that does not constitute proper service.

M/s Birla Brothers Private Limited, challenged an order dated 6 March 2023 imposing tax, interest and penalty under Section 73 of the GST Act.

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The petitioner contended that neither the show cause notice nor the adjudication order was ever effectively served, as both were uploaded only under the “Additional Notices and Orders” tab on the GST portal, instead of the regular “Notices and Orders” section.

As a result, the company remained unaware of the proceedings and lost the opportunity to file a reply or seek a personal hearing. The issue came to known only after a recovery notice was later received by email, prompting the taxpayer to search the portal.

The State defended the action by arguing that uploading notices on the GST portal has statutory recognition and therefore amounts to valid service.

However, the High Court rejected this contention, noting that mere uploading is not sufficient if the manner of uploading does not ensure effective communication.

Justice Om Narayan Rai observed that it was undisputed that no notice was served by any mode other than portal upload, and that the placement of notices under an obscure or secondary tab could not be treated as proper service.

The Court ruled that when an adverse decision is contemplated under Section 73, the Proper Officer is statutorily bound under Section 75(4) to grant an opportunity of personal hearing.

Section 75(4) reads that “(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”

While uploading a show cause notice only under the “Additional Notices and Orders” tab, the Court held, does not amount to due communication and deprives the taxpayer of a meaningful opportunity to defend itself. Such procedural lapses, the Court said, constitute an abject violation of natural justice.

Accordingly, the High Court set aside the adjudication order dated 6 March 2023 and granted the petitioner three weeks’ time to file a reply to the original show cause notice dated 20 January 2023.

The adjudicating authority was directed to consider the reply and pass a fresh order in accordance with law after granting a reasonable opportunity of hearing.

At the same time, the Court clarified that if the taxpayer fails to file a reply within the stipulated period, the benefit of the order would lapse and the earlier adjudication order would revive.

Mr. Rahul Dharuka and Ms. Sreeje Chakraborty appeared for the petitioner and Mr. S.K. Dutta, Mr. Tanoy Chakraborty, Ms. Sumita Shaw and Mr. Saptak Sanyal appeared for the respondents.

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