The Madras High Court set aside the ex parte assessment order passed against the assessee due to ineffective communication through the Goods Service Tax (GST) portal notice service.
Axiom Gen Nxt India Private Limited,petitioner-assessee,did not receive the show cause notices and was unable to submit a reply. As a result, the assessment order were passed ex parte without giving any chance for a personal hearing.
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The assessee counsel submitted that the petitioners couldn’t participate in the assessment proceedings due to various reasons. In most cases, the show cause notices were uploaded under the wrong tab on the GST portal and went unnoticed. In some instances, consultants or employees handling GST matters failed to track the portal or had left the job. A few petitioners, being senior citizens, couldn’t follow up due to health issues or lack of technical knowledge.
It was argued that the notices were served only through the portal under Section 169(1)(d) of the GST Act, without trying other valid modes like registered post. The counsel stated that mere uploading did not amount to proper service, especially when there was no designated system for receipt. They also pointed out that the appeal period starts from the date of proper communication, which hadn’t happened in these cases.
The assessee counsel contended that the ex parte orders were passed without giving a fair chance of hearing, violating principles of natural justice, and should be set aside for fresh consideration.
A single member bench of Justice Krishnan Ramasamy considered the petitioner’s argument that notices were only uploaded to the GST common portal under Section 169(1)(d), which they claimed wasn’t a valid mode of service. They pointed out that other methods like email or post were available and should have been used.
The petitioner also argued that they had not designated the portal as their communication channel, and according to the Information Technology Act, service would only be complete once they retrieved the notices.
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The authorities countered that the portal was considered a designated computer resource under GST law, and service was complete once the notice was uploaded. The Court reviewed Section 169 of the GST Act and found that notices could be served through various methods, including uploading to the common portal, which it deemed sufficient.
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The petitioner argued that uploading the notice on the portal wasn’t valid since Section 169(2) only mentioned certain methods like tendering or affixing notices. However, the Court disagreed, stating that uploading could be considered “tendering” and was a valid form of service.
The bench also referred to Section 13 of the IT Act, clarifying that if a computer resource was designated for receiving notices, service occurred when the notice entered that system. Since the common portal was the default communication system, service was complete when the notices were uploaded.
The High Court pointed out that the petitioners had failed to respond to the notices uploaded on the portal. The petitioners explained they were not familiar with the portal and had not received proper guidance. Despite reminders being sent through the portal, no response was received.
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The Court criticized the respondents for not using more effective methods, like sending reminders through registered post after the initial notices went unanswered. It concluded that the service, though valid, was ineffective due to the respondents’ failure to explore alternative methods. The bench set aside the ex parte assessment orders and required the petitioner to pay 25% of the disputed tax amount. It noted that both parties were at fault in the case.
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