M/S. Raja Babu Kapra Ghar vs. The Union Of INDIA

Held

The Court held that the impugned ex parte assessment order dated 06.02.2025 is liable to be set aside. The Court noted that there was no contest to the petitioner's statement that the notice of personal hearing was not served by any mode other than its placement under the heading ‘Additional Notices and Orders’ on the GST portal. Consequently, the petitioner was deprived of a valuable opportunity of hearing, which violates the principles of natural justice. The Court reasoned that effective service of notice is crucial, and merely uploading on the portal, especially under an 'Additional' section without the petitioner's awareness, does not fulfill the requirement of valid service. The ratio decidendi is that an ex parte assessment order passed without proper service of notice and without affording an opportunity of hearing is unsustainable in law. The Court set aside the impugned orders and directed the petitioner to appear before the competent authority within three weeks. The authority was directed to grant an opportunity to file a show cause and provide a personal hearing, and thereafter pass a reasoned order within four months.

Facts

The petitioner, M/s. Raja Babu Kapra Ghar, a proprietary concern, filed a writ application challenging an ex parte assessment order dated 06.02.2025 passed by the Joint Commissioner, State Tax, Siwan Circle, Siwan, under Section 73(9) of the Bihar Goods and Services Tax (BGST) Act, 2017, for the financial year 2020-21. The petitioner claims that the order and the demand raised in Form DRC-07 were passed without a reasoned order, without proper service of any notice, much less a show cause notice, and without granting an opportunity of hearing as contemplated under Sections 169 and 75(4) of the BGST Act, 2017. The petitioner stated that notices were only uploaded under the heading ‘Additional Notices and Orders’ on the GST portal, and they were not aware of this mode of service.

Key Issues

1. Whether the ex parte assessment order dated 06.02.2025, passed by confirming the demand in DRC-01 without a reasoned order and without proper service of notice, is non-est in the eyes of law, turning on Section 73(9) and Section 75(5) of the BGST Act, 2017? 2. Whether the non-service of purported show cause notices, reminders, or the assessment order by a valid mode of service under Section 169 of the BGST Act, 2017, amounts to a violation of the principles of natural justice, rendering the impugned order liable to be quashed, as per Section 75(4) of the BGST Act, 2017? Petitioner's Arguments: The petitioner argued that the assessment order was ex parte because notices were not served through any valid mode contemplated by Section 169 of the BGST Act, 2017. They contended that merely uploading notices under ‘Additional Notices and Orders’ on the GST portal does not constitute effective service, especially when the petitioner was unaware of this placement. They relied on judgments from the Patna High Court (M/s Lord Vishnu Construction Pvt. Ltd. and M/s Shree Shyam Trading Co.) and the Madras High Court (M/s Axiom Gen Nxt India Private Limited), which suggest that effective service, often through at least two modes, is required. They also emphasized the right to a hearing under Section 75(4) of the BGST Act, 2017. Respondents' Arguments: The State respondents did not contest the petitioner's specific statement in paragraph 16 of the writ application regarding the mode of service. They acknowledged that recent judicial pronouncements favor effective service beyond just portal uploads, and this aspect might not have been adequately addressed in their counter affidavit due to the recency of these rulings.