M/S. Vj Enterprises vs. The Deputy Commissioner (GST Appeals) (State Tax)

Held

The Court held that the show cause notice issued solely through the GST portal, without being in the vernacular language and without ensuring it was understood by the petitioner, violated the principles of natural justice. The Court noted that the petitioner is an illiterate trader and not expected to regularly follow the portal for notices. The Court referred to a previous order concerning the financial year 2020-2021, where a similar issue of notice issuance through the portal led to the setting aside of the impugned order and a remand. Reasoning that the respondents ought to have issued notice via registered post or SMS to ensure the petitioner understood the proceedings, the Court found the impugned order to be illegal. The Court set aside the impugned order and directed the respondents to issue a fresh show cause notice in the regional language through registered post or SMS within two weeks, enabling the petitioner to contest the case.

Facts

M/s. VJ Enterprises, a scrap purchaser, is challenging an order dated 03.05.2023 passed by the State Tax Officer, Nanguneri, demanding Rs. 5,93,118/- for the financial year 2021-2022. The demand arose from the fraudulent claim of Input Tax Credit (ITC) based on invoices from Golden Traders, Chennai. An inspection at Golden Traders revealed that invoices were issued without actual supply. Following an inquiry, a show cause notice was issued to VJ Enterprises through the GST portal. The petitioner failed to appear for a personal hearing, leading to the impugned order. The petitioner argues that a similar writ petition for the year 2020-2021 was allowed by this Court, setting aside a similar order and remanding the matter for fresh consideration.

Key Issues

1. Whether the show cause notice issued solely through the GST portal, without personal service or in the vernacular language, violates the principles of natural justice, particularly for an illiterate trader? Petitioner's Argument: The petitioner contends that the show cause notice was issued only through the GST portal, which they, being an illiterate person, are not accustomed to monitoring. They argue that the notice was not in the vernacular language and that principles of natural justice require notice to be served in a manner that ensures understanding, such as registered post or SMS. They rely on the precedent set by this Court in a similar case for the previous financial year. Revenue's Argument: The judgment does not record any specific arguments made by the revenue or state in response to the petitioner's contentions regarding the mode of service of the show cause notice.