A S Traders vs. The State Of Uttarakhand

Held

The Court held that the service of notices exclusively through the GST portal, in the circumstances where the petitioner's registration stood cancelled, did not constitute valid service under Section 169 of the CGST Act. The Court reasoned that while portal-based service is a permissible method, it is not exclusive, and the Department has a duty to ensure effective communication. Insisting on portal-based service alone imposes a duty on a non-registered person, which is not legally contemplated. The Court also found that the impugned order violated Section 75(4) of the CGST Act, which mandates an opportunity of hearing, embodying the principle of natural justice. The Court relied on the Allahabad High Court's decision in M/s Ahs Steels and its own prior order in M/s Jaipal Singh. Consequently, the impugned assessment order and recovery citation were quashed. The petitioner was directed to reply to the show-cause notice within two weeks, and the respondent-department was permitted to pass a fresh order after granting the petitioner an opportunity of personal hearing as contemplated under Section 75(4).

Facts

The petitioner, A.S. Traders, a sole proprietorship engaged in the iron scrap business, faced adverse effects due to the Covid-19 pandemic, leading to an application for surrender of its GST registration on 14.08.2020. Subsequently, the petitioner's registration was cancelled effective 31.03.2023. Despite the business closure and cancellation application, the respondents issued a show-cause notice dated 14.12.2022, uploaded on the GST portal, alleging non-payment of tax for the financial year 2020-2021. The petitioner claims to have not visited the GST portal after closing the business and thus remained unaware of the proceedings, which consequently became ex-parte. This led to an ex-parte assessment order dated 03.02.2024 and a consequent recovery certificate dated 03.02.2024, both for the assessment year 2020-21, which are under challenge.

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 assessment order suffers from a violation of the statutory mandate under Section 75(4) of the CGST Act, requiring an opportunity of personal hearing? Petitioner's arguments: The petitioner contends that service of notices solely through the GST portal is not valid when the registration has been cancelled, as the petitioner is not obligated to monitor the portal. This imposes a duty on a non-registered person, which is not contemplated by law. Reliance is placed on judgments of the Allahabad High Court in M/s Ahs Steels vs. Commissioner of State Taxes and M/s Katyal Industries vs. State of U.P., which held that portal-based service alone is not exclusive and effective service is required. Furthermore, the petitioner argues that the principle of audi alteram partem, as enshrined in Section 75(4), was violated by not affording a personal hearing before passing an adverse order. Revenue's arguments: The judgment records no specific arguments from the State respondents.