The GST regime is largely driven by technology, with notices, replies, and adjudication proceedings being conducted through the online GST portal. While this digital system aims to ensure transparency and efficiency, it also creates challenges when technical glitches prevent proper communication of statutory notices.
In a recent ruling, the Madras High Court dealt with an important issue concerning the validity of an assessment order issued in Form GST DRC-07, where the foundational show cause notice in Form GST DRC-01 was not effectively uploaded or communicated due to a portal error. The Court held that such non-communication resulted in denial of a reasonable opportunity to respond, thereby violating the principles of natural justice. Consequently, the assessment was quashed and the matter was remanded for fresh adjudication.
This decision reinforces that procedural fairness and effective notice are essential prerequisites before confirming GST demands.
Facts
- The assessee was served a GST assessment order in Form DRC-07 (demand order) for a relevant period.
- Before issuing DRC-07, a show cause notice in Form DRC-01 was uploaded on the GST portal but due to a portal glitch the assessee did not notice it.
- Consequently, the assessee did not file any reply as they were unaware of the SCN.
- When the DRC-07 order was passed, it confirmed tax liability without the assessee having known about or responded to the foundational show cause notice.
High Court’s Decision
- The Madras High Court held that sole uploading of the show cause notice on the GST portal (without effective communication) — especially where the assessee never saw it — results in a breach of the principles of natural justice (i.e., right to fair hearing).
- Because the assessee didn’t have effective knowledge of the SCN due to the portal glitch, they were denied a reasonable opportunity to respond before the assessment was finalized.
- Result:
- The assessment order (DRC-07) was quashed on this ground.
- The matter was remitted to the assessing authority for fresh adjudication after providing the assessee an opportunity to reply to the SCN.
Legal Principle
- Effective communication of notices and orders is crucial in GST proceedings. Merely uploading notices on the GST portal, if unnoticed and not brought to the taxpayer’s attention, may violate natural justice (i.e., a fair opportunity to be heard).