In a significant judgment safeguarding taxpayer rights, the Madras High Court has ruled that tax authorities must issue at least one reminder notice via Registered Post Acknowledgement Due (RPAD) or other valid modes specified under Section 169 of the GST Act, before passing an ex-parte assessment order.
Background of the Case
The ruling was delivered by Justice Krishnan Ramasamy on June 11, 2025, in the case of M/s. Pioneer Products vs The State Tax Officer (FAC). The Court quashed the assessment order dated January 9, 2025, issued by the State Tax Officer, citing non-compliance with the mandatory service of notice provisions under the GST law.
Key Observations by the Court
The petitioner, M/s Pioneer Products, contended that the Show Cause Notices (SCNs), including Form GST DRC-01 and personal hearing communications, were only uploaded in the “Additional Notices and Orders” tab of the GST portal. However, they were not reflected in the main “Notices and Orders” section, nor were they served through physical means like RPAD.
As a result, the petitioner remained unaware of the proceedings and could not file a response or attend the hearing. The Court agreed with the petitioner, emphasizing that merely uploading notices on the portal without ensuring effective communication through physical or other valid modes does not meet the standards of due process.
Reminder Notice Before Ex-Parte Order is Mandatory
The Court categorically stated:
“When an ex-parte order is passed, the respondent authority must send at least one reminder notice through RPAD or by any other valid mode as prescribed under Section 169 of the GST Act.”
The absence of such an effort to communicate deprives the taxpayer of a fair opportunity to present their case, violating the principles of natural justice, the Court highlighted.
Relief Granted to the Taxpayer
The Madras High Court set aside the contested assessment order and directed the matter to be re-examined by the assessing authority. However, the Court permitted this relief on the condition that the petitioner deposits 25% of the disputed tax amount within three weeks from the date of receiving the Court’s order.
Timelines Directed by the Court
- 25% Tax Deposit:
The petitioner must deposit 25% of the disputed tax within three weeks from the date of receiving the Court’s order. - Filing of Reply:
Within two weeks from the date of the deposit, the petitioner is allowed to submit a detailed reply along with all supporting documents. - Personal Hearing:
The tax authority must provide a 14-day advance notice for a personal hearing before passing a fresh assessment order in accordance with the law.
Conclusion
This judgment reinforces the importance of ensuring proper service of notices in GST proceedings. Taxpayers cannot be subjected to ex-parte assessments unless authorities have made reasonable efforts to communicate through valid modes, including physical delivery of notices.
Case Details:
- Case Title: M/s. Pioneer Products vs The State Tax Officer (FAC)
- Case No.: W.P.No.20594 of 2025 & W.M.P.Nos.23209, 23211 & 23212 of 2025
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Date of Judgment: June 11, 2025