M/S.Fashion Care vs. The Commercial Tax Officer (State Taxes)

Facts

The petitioner, M/s. Fashion Care, engaged in exporting Home Textiles, filed a writ petition challenging a notice in Form GST DRC-07 dated 04.05.2024, issued by the first respondent, the Commercial Tax Officer. This notice demanded payment of Rs. 22,83,734/- for alleged non-payment of taxes for the assessment year 2021-2022, pursuant to an order of assessment dated 03.05.2024. The petitioner argued that these notices were not served by tender or RPAD but only uploaded to the common portal, which they could not access. Consequently, they were unable to participate in the adjudication proceedings. The core of the dispute was an alleged mismatch between GSTR-1 and GSTR-3B returns.

Held

The Court held that the impugned proceedings, specifically the order of assessment dated 03.05.2024 and the notice dated 04.05.2024, were to be set aside. The reasoning was based on the petitioner's submission that they were unable to access the common portal and thus could not participate in the adjudication proceedings, leading to a denial of a reasonable opportunity to be heard. The Court acknowledged the petitioner's willingness to deposit 25% of the disputed tax and their request for a final opportunity to present objections. The ratio decidendi is that proper service of notice is crucial for natural justice, and where a party is demonstrably prevented from participating due to portal issues or lack of proper service, a fresh opportunity should be granted. The Court directed the petitioner to deposit 25% of the disputed tax within four weeks. Upon compliance, the order of assessment would be treated as a show cause notice, and the petitioner would have four weeks to submit objections. The respondents were directed to consider these objections and pass orders after affording a hearing. Failure to comply would result in the revival of the impugned order. No issue was expressly left undecided.

Key Issues

1. Whether the impugned show cause notice and order of assessment, issued under Section 73 of the TNGST Act, are liable to be set aside for non-service by conventional methods (tender or RPAD) and sole reliance on portal upload, thereby denying the petitioner an opportunity to be heard? Petitioner's Arguments: The petitioner contended that the notices were not properly served, as they were only uploaded to the common portal, which they could not access due to technical glitches and the learning curve associated with the GST e-mechanism. This lack of proper service prevented them from participating in the adjudication process and explaining the alleged discrepancies between their GSTR-1 and GSTR-3B returns. They relied on the judgment in M/s.K.Balakrishnan, Balu Cables vs. O/o. the Assistant Commissioner of GST & Central Excise. The petitioner also expressed willingness to deposit 25% of the disputed tax and sought a final opportunity to present their objections. Respondents' Arguments: The learned Additional Government Pleader for the respondents did not raise any serious objection to the petitioner's request for a final opportunity, subject to certain conditions.