M/S Xithelia Nova Healthcare Private Limited vs. State Of Uttarakhand

Held

The Court held that the service of the Show Cause Notice solely through the GST portal was not valid service under Section 169 of the CGST Act, given that the petitioner's registration had been cancelled prior to the issuance of the notice. The Court reasoned that once registration is cancelled, the assessee is no longer obligated to monitor the GST portal, and service by this method alone fails to ensure effective communication, thereby violating the statutory requirement of service. The Court also implicitly addressed the violation of Section 75(4) by quashing the adjudication order and directing a fresh adjudication from the stage of the Show Cause Notice, which would include granting an opportunity for personal hearing. The ratio decidendi is that service of notices under the GST Act must be effective and reach the assessee, and portal-based service alone is insufficient when the assessee's registration is cancelled. The adjudication order was quashed, and the Revenue was granted liberty to proceed from the stage of the Show Cause Notice, with a direction to provide a personal hearing if sought by the petitioner.

Facts

The petitioner, Xithelia Nova Healthcare Private Ltd., filed a writ petition challenging an adjudication order passed by Respondent No. 3 for the Financial Year 2018-19, which raised a demand of Rs. 6,91,599/-. The petitioner also sought to quash proceedings initiated by a Show Cause Notice dated 06.11.2023. The petitioner's registration was cancelled on 03.04.2021, effective from 24.03.2021. The petitioner argued that the Show Cause Notice was only served by uploading it to the GST portal, and after cancellation of registration, they were not obligated to monitor the portal. Consequently, they were unaware of the notice and the subsequent adjudication order. The revenue did not dispute that service was effected solely through the GST portal.

Key Issues

1. Whether the service of notices exclusively through the GST portal, in circumstances where the petitioner's registration stood cancelled, constitutes valid service under Section 169 of the CGST Act? 2. Whether the impugned adjudication order suffers from a violation of Section 75(4) of the CGST Act, which mandates an opportunity of personal hearing? Petitioner's Arguments: The petitioner contended that service of the Show Cause Notice solely via the GST portal was invalid because their registration had been cancelled. They argued that after cancellation, they were not required to monitor the portal, and thus, effective service was not achieved. This violated Section 169 of the CGST Act and the principles of natural justice. They relied on the Uttarakhand High Court's decision in Raj Shekhar Pandey vs. State Tax Officer and the Allahabad High Court's decisions in M/s Ahs Steels vs. Commissioner of State Taxes and M/s Katyal Industries vs. State of U.P. and others, which held that portal-based service alone is insufficient when registration is cancelled. Revenue's Arguments: The learned Standing Counsel for the Revenue did not dispute the factual position that the Show Cause Notice was served upon the petitioner only by uploading it on the GST portal and by no other mode.