Notices uploaded only through Portal – Reply could not be filed – Assessee is not acquainted with technology – Order Set aside

In the case of:

Abitha Timber Traders Vs. Assistant Commissioner (ST)(FAC)

W.P. (MD) No. 3838 of 2024

[2024] 160taxmann.com379 (Madras)

It was observed by Hon’ble High Court of Madras that:

  1. Petitioner is a Timber Trader and not acquainted with the advanced technology of following the notices, which has been uploaded in the portal. He submits his returns only through the Auditor.
  2. The impugned order has been passed after issuing notice in Form ASMT-10 dated 13.05.2022 and notice in Form DRC 01A dated 05.11.2022 and notice in Form DRC 01 dated 03.12.2022, all of them uploaded only through Portal.
  3. Though Section 169(d) of TNGST Act 2017, enables the respondent to issue notice through the common portal, other modes are also made available to the respondent under Section 169 of the TNGST Act 2017.
  4. In a similar case of Pushpam Reality v. State Tax Officer [2022] 136 taxmann.com 195 / 91 GST 417/2022 (63) G.S.T.L. 442 (Mad.), this court has held that:
    • Though Section 169 of the respective GST Acts allows the authorities to communicate any decision, etc. under this Act by any one of the methods specified, unless the proper conformation that notices and impugned orders which were uploaded in the web portal of the State Government in tngst.cid.tn.gov.in are auto populated, it cannot be said that there is sufficient compliances of the aforesaid Section.
    • GST Act was implemented in the year 2017 with effect from 01.07.2017. The web portal maintained by GST has faced problems on several occasions and steps were taken for correcting the technical glitches. Even as on date, there are problems arising out of intercommunication between the State GST and Central GST and the web portal which has to be resolved.
    • The respondents can therefore continue the service of notice through registered post or speed post or courier with acknowledgment to the petitioners at their last known place of business or residence and upload the same in the web portal. Till all problems are resolved on the technical side, the authority may simultaneously serve the notice of assessment and communications under the Act and Rules both through registered post or speed post or courier with acknowledgment as is contemplated Section 169(1)(b) of the Act and through web portal.
    • Once all technical problems are resolved, the practice of sending physical copy through registered post or speed post or courier with acknowledgment may be dispensed with.
  5. Considering the above decision, the impugned Order is set aside and the matter is remanded back to the respondent for fresh consideration.
  6. The respondent shall proceed with the assessment and pass orders afresh, after providing an opportunity of hearing to the petitioner. 
  7. In order to avoid such a situation, the respondent shall also find out the possibility of issuing the notices through other modes, which are also made available under Section 169 of the TNGST Act 2017.

Section 169(1) of CGST Act – Service of Notice:

(1) Any decision, order, summons, notice or other communication under this Act or the rules made thereunder shall be served by any one of the following methods, namely:—

  1. by giving or tendering it directly or by a messenger including a courier to the addressee or the taxable person or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxable person; or
  2. by registered post or speed post or courier with acknowledgement due, to the person for whom it is intended or his authorised representative, if any, at his last known place of business or residence; or
  3. by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or
  4. by making it available on the common portal; or
  5. by publication in a newspaper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain; or
  6. if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence and if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the office of the concerned officer or authority who or which passed such decision or order or issued such summons or notice.

Where ITC is claimed in GSTR-9 and available in 2A, it cannot be rejected if not claimed in GSTR-3B

Citation:

Sri Shanmuga Hardwares Electricals Vs. State Tax Officer

W.P. Nos. Nos.3804, 3808 & 3813 of 2024

High Court of Madras

[2024] 159 taxmann.com 756 (Madras)

  1. Inadvertently, NIL GSTR-3B returns have been filed by the petitioner for FY 2017-18, 2018-19 and 2019-20.
  2. Petitioner submitted that Input Tax Credit has been reflected in GSTR-2A and the same has been declared in GSTR-9 filed for those periods and also that in each of the periods, the ITC has exceeded the Tax Liability. However, ITC claim was rejected solely on the ground that the same was not claimed in GSTR-3B returns.
  3. Department has argued that burden of proof to establish ITC eligibility is on the petitioner and since he has not discharged the same, interference of this court with the orders dated 30.09.2023 for the above assessment years is not called for. It has also stated that petitioner should not have approached this Court and should have availed the Statutory Remedy.
  4. Hon’ble High Court has held that:
    • The assessing officer should examine the validity of ITC claim by examining all relevant documents, including calling the petitioner to provide such documents. However, since the claim was rejected solely on the ground that ITC was not claimed in GSTR-3B, interference is warranted with the present orders.
    • The Impugned Orders are quashed and matters are remanded back for reconsideration. Petitioner has to submit all relevant documents for ITC claim, by two weeks, and the department has to pass an order within two months form the receipt of documents, after providing a reasonable opportunity of being heard, to the petitioner.

Where proceedings are pending under SGST, CGST authorities cannot proceed with a Notice

Citation:

Rajesh Mittal Vs. Union of India – WP(C) No. 371 of 2024

High Court of Gujarat

[2024] 160 taxmann.com 49 (Gauhati)

Facts:

  1. Notice was issued in Form GST DRC-01A dated 29.11.2023 to the petitioner by SGST Authorities, alleging violation of Section 16(4) of the CGST Act – Input Tax Credit taken after the due date, i.e., 30th November (Due date for GSTR-3B for the month of September, prior to 1st October 2022)
  2. This was followed by Show Cause Notice dated 01.12.2023, to which the petitioner uploaded a reply on 31.12.2023.
  3. During these proceedings with SGST Authorities, another Show Cause Notice dated 27.12.2023 was issued by CGST Authorities on the same issue – alleged violation of Section 16(4) of the Act, for the same amount.

Arguments:

  1. The petitioner has submitted that Issue of SCN dated 27.12.2023 by CGST authorities during the pendency of SCN dated 01.12.2023 by SGST authorities is in violation of Section 6(2)(b) of CGST Act – Link Below contains Article on Section 6.
  2. Department has sought time to obtain instructions in this matter, since the petitioner has filed a representation before the CGST authorities.
  3. Department has also sought for listing on 07.02.2024.

Decision of the High Court:

  1. The Case is listed on 07.02.2024.
  2. Until the next date of listing, CGST authorities shall not proceed further in terms of SCN dated 27.12.2023.

Ingredients of Section 74 are not satisfied – Assessment Order is Set Aside

Citation:

Balaji Electrical & Hardwares Vs. State Tax Officer (ST) – WP No. 3458 of 2024

High Court of Madras

[2024] 159 taxmann.com 562 (Madras)

Facts:

  1. Assessment Order dated 14.07.2023 and Consequential Attachment Notice (Link below contains provisions relating to Provisional Attachment) dated 21.12.2023 were passed.
  2. Assessee states that he was filing all the required GST Returns and was unaware of the intimation, Show Cause Notice and the attachment order until the Attachment order was communicated to him, whereupon, he has filed a letter for Rectification dated 03.01.2024 (under Section 161 – Error apparent on the face of the record – Link below contains provisions relating to Section 161).

Arguments of Petitioner:

  1. Order is issued under Section 74, but the requirements for the same have not been fulfilled – no allegations of fraud, willful misstatement or suppression of facts.
  2. Order is completely unreasoned – No Shortfall in GSTR-1 Vs. GSTR-3B
  3. 10% of Tax Demand will be deposited if provided another Opportunity before the assessing officer.

Arguments of Department:

  1. The petitioner was provided sufficient opportunities by issuing an intimation, SCN and a Personal hearing.
  2. Principles of Natural Justice were adhered to. No case for interference under Article 226 of the Constitution.
  3. The Assessment Order states that the petitioner did not comply with the Tax Demand or file any objections. Hence, it cannot be said that Opportunity was not provided to respond to the tax demand.

Decision of the Hon’ble High Court:

  1. On examining the Impugned Order and the SCN, it is noticeable that the order is unreasoned.
  2. The Assessment Order and Consequential Attachment Notice are quashed subject to the condition that 10% of the Disputed Tax is deposited within 2 weeks.
  3. Assessing officer is directed to pass a fresh assessment order within 2 months after providing Personal hearing.

Delay in filing application for revocation of cancellation can be condoned – Department to open Portal for filing returns

Citation:

Biplab Kumar Patra Vs. Additional State Tax Officer

W.P.(C) No. 487 of 2024 dated January 16, 2024 – High Court of Orissa

[2024] 159 taxmann.com 123 (Orissa)

In the above case, Hon’ble High Court of Orissa has held that:

  1. The delay in Petitioner’s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner’s application for revocation will be considered in accordance with law.
  2. The proper officer will open the portal to enable the Petitioner to file the GST return.

As per Rule 23 of CGST Rules (OGST Rules), application for revocation of cancellation of registration need to be made within 90 days from the date of service of order of cancellation.

Non-filing of Part B of e-Way Bill – Error of Technical Nature – Penalty Set Aside

Citation:

Rawal Wasia Yarn Dying (P.) Ltd. vs. Commissioner Commercial Tax

Writ Tax No. 352 of 2023 dated January 16 2024

[2024] 158 taxmann.com 609 (Allahabad)

In the above case, it was held that the non-filing of Part B of the e-way bill can be considered merely an error of technical nature and the penalty levied under Section 129(3) was set aside, considering the following facts,

  1. The details of the Truck were contained in the invoice itself,
  2. The goods were not in variance with the invoice and
  3. There is no proof of any intention of the petitioner to avoid payment of Tax.

Relevant provisions of Section 129:

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-


(a)		on payment of penalty equal to 200% of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs. 25,000, whichever is less, where the owner of the goods comes forward for payment of such penalty;
(b)on payment of penalty equal to 50% of the value of the goods or 200% of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to 5% of the value of goods or Rs. 25,000, whichever is less, where the owner of the goods does not come forward for payment of such penalty;
(c)upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

129 (3). The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).

Section 129(1) and (3) of CGST Act w.e.f. 1st January 2022

Cancellation of GST Registration to be effective from Closure of Business

Citation:

Shree Shyam Metals Vs. Commissioner of Goods & Service Tax

W.P.(C) No. 14120 of 2023 – High Court of Delhi

[2024] 158 taxmann.com 144 (Delhi)

Brief Facts:

  1. The Petitioner has applied for cancellation of GST registration w.e.f. 08-02-2021, being the date of closure of the business.
  2. The application was rejected vide an order.
  3. The petitioner made another application dated 16-9-2021 requesting for cancellation w.e.f. 31-8-2021. GST authorities have issued a notice dated 27-9-2021 requiring further information.
  4. Petitioner claimed that the said notice dated 31-8-2021 was not served on them and that the same is also beyond the stipulated period of time and not permissible.
  5. Since there was no response to the notice dated 27-9-2021, the application was rejected vide an order dated 31-10-2021. Also, SCN was issued dated 29-9-2022, proposing cancellation stating that the petitioner was non-existent.

Findings:

  1. The Impugned Order does not indicate any reasons for cancellation with retrospective date w.e.f. 01-01-2019 and also that it did not mention that registration was proposed to be cancelled with retrospective date w.e.f. 01-01-2019. Hence, the petitioner was not provided an opportunity to contest the cancellation.
  2. There is no material on record, to indicate that petitioner was non-existent as on 1-1-2019 or at any time prior to 8-2-2021.

Order:

  1. The Impugned Order canceling the GST registration be effective from 8-2-2021.
  2. However, in case the GST authorities seek to cancel from a date prior to 8-2-2021, SCN will be issued clearly setting out the reasons and pass on order as they deem fit after affording an opportunity of being heard to the petitioner.

Similar Decisions on this issue (Retrospective Cancellation of GST Registration):

Retrospective cancellation of GST cannot be made for Non-filing of returns for 6 months.

Retrospective cancellation of GST Registration cannot be made without satisfying Section 29(2)

Retrospective cancellation of GST cannot be made for Non-filing of returns for 6 months.

Citation:

Raj Enterprise Vs. Superintendent, Range 25 GST Division

W.P.(C) No. 15777 of 2023 – High Court of Delhi

[2024] 158 taxmann.com 143 (Delhi)

Brief Facts:

  1. Petitioner stopped carrying on the business and made an application for cancellation of registration on 19-10-2021. Upon certain queries remaining unanswered, the application was rejected on 30-11-2021.
  2. On 1-12-2021, another application was made requesting cancellation w.e.f. 15-11-2021.
  3. Petitioner also claimed that it has filed returns till 31-12-2021.
  4. The application was again rejected and SCN dated 10-8-2022 was issued proposing the cancel the registration for failure to furnish returns for a continuous period of 6 months.
  5. Petitioner did not respond. On 27-9-2022, an order was passed cancelling the registration w.e.f. 19-10-2020.

Findings:

Hon’ble High Court of Delhi has observed that:

  1. As per Section 29(2)(c), the registration may be canceled from any date including retrospective effect, but the same cannot be arbitrary or whimsical.
  2. In the present case, the sole ground for cancellation was non-filing of returns for 6 months. This would not be sufficient for cancellation of registration even for the period it was carrying business and filing returns.
  3. There is a necessity for the proper officer to apply his mind and pass the cancellation order based on some objective criteria.
  4. The present SCN also did not indicate that the petitioner’s registration was proposed to be cancelled with retrospective effect. Hence, the petitioner had no effective opportunity to contest the retrospective cancellation.
  5. The petitioner has stopped carrying on business only from 19-10-2021 and t is from that date that they have requested for cancellation.

Order:

The Impugned Order shall take effect from 31-12-2021, which is till the date the petitioner has filed the returns.

Appeal allowed to be filed Manually – Rule 108 of Haryana GST Rules (up to 04-08-2023)

In the case of Optum Global Solutions (India) (P.) Ltd Vs. State of Haryana C.W.P. No. 26273 of 2023, 2024 158 Taxmann.com 20 (Punjab & Haryana) Appeal against rejection of refund was filed manually for the period April 2018 to June 2018 on 31-08-2020 against order dated 4-6-2020. Appellate Authority has rejected the appeal on the grounds that it was filed manually.

Hon’ble High Court of Punjab and Haryana has restored the appeal stating that up to 04-08-2023, appeal may be filed “Electronically or Otherwise”. Hence, Manual filing has also been accepted prior to that period.

Relevant Provisions:

Rule 108(1) of CGST Rules (Appeal to Appellate Authority) has been amended vide Central Goods and Services Tax (Second Amendment) Rules, 2023, w.e.f. 04-08-2023, wherein the words “electronically or otherwise as may be notified by the commissioner” has been replaced by “Electronically”. Hence, Appeal can be filed only electronically after 4th August 2023.

However, Proviso to Rule 108(1) inserted vide the same rules states that “An appeal to the Appellate Authority may be filed manually in FORM GST APL-01, along with the relevant documents, only if-

(i) the Commissioner has so notified, or

(ii) the same cannot be filed electronically due to non-availability of the decision or order to be appealed against on the common portal,

and in such case, a provisional acknowledgement shall be issued to the appellant immediately.

9 days is not reasonable time to reply to Show Cause Notice – Audi Alteram Partem Violated – SCN is invalid

Citation:

Raymond Ltd. Vs. Union of India

Writ Petition No. 26693 of 2022 – Hon’ble High Court of Madhya Pradesh

[2023] 157 taxmann.com 654 (Madhya Pradesh)

Facts of the Case:

  1. A Show Cause Notice (SCN) was issued on 03-09-2022 under Section 73 of CGST Act, 2017, affording 30 days of time for the petitioner (Raymond Ltd) to respond.
  2. Order of Demand was issued on 12-09-2022 (Within 9 days of issue of SCN).

Grounds for Filing the Petition:

The following three grounds were preferred:

  1. Denial of Reasonable Opportunity: Though the SCN has provided 30 days, Order was passed within 9 days, not providing reasonable time to reply to the SCN.
  2. Principle of Audi Alteram Partem Violated: SCN is not self-contained – It fails to inform about the material of adverse nature which constituted the foundation of the SCN, thereby disabling the petitioner to respond. Hence, Principle of Audi Alteram Partem (Hear the Other Side) was violated.
  3. Opportunity of Personal Hearing was not afforded.

Findings:

  1. Though Section 73 does not specify a time period to respond to SCN, the statute contemplates affording reasonable opportunity to reply. Section 73(2) states that SCN needs to be issued at least 3 months prior to the issue of the Order u/s. 73(10)
  2. Concept of reasonable Opportunity demands that reasonable time to reply should be not less than 15 days at least.
  3. As per Section 73(8), time period provided for payment of tax, interest, and penalty is 30 days from the date of SCN(For the proceedings in respect of the SCN to be considered as deemed to be concluded). Hence, the reasonable period for responding to the SCN ought to be 30 days.
  4. Any SCN should contain enough and adequate material which motivated the authority to take a view against the noticee. If the contents of the SCN are lacking in Material particulars or are vague in regard to any entries contained therein, then it would be vulnerable to judicial review.
  5. Hence, the present SCN falls short of minimum period of 30 days to afford reasonable opportunity to noticee to respond and also appears to be lacking in material particular.

Order:

  1. The Impugned SCN dated 03-09-2022 and the Order dated 12-09-2022 are set aside
  2. Revenue is at liberty to issue fresh and legal SCN and proceed after affording reasonable and sufficient opportunity of being heard, to the petitioner.
  3. The petitioner shall be entitled to a cost of Rs. 10,000 to be paid by the respondents and compliance report to be filed by them (respondents) in Registry within 60 days.

Relevant Provisions:

Section 73(1) and (2) of CGST Act:

(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.

(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.

Section 73(8):

Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.

Section 73(10):

The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.