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IN THE HIGH COURT OF KERALA AT ERNAKULAM
BECHU KURIAN THOMAS, J
M/S. RAMANATTU MOTOR CORP. – Appellant
Versus
STATE OF KERALA – Respondent
JUDGMENT :
Petitioner challenges the show cause notice and the consequential order issued under section 73 of the Central Goods and Services Tax Act, 2017/State Goods and Services Tax Act, 2017 (for short ‘the GST Act’) imposing tax, interest and penalty.
2. Petitioner is a partnership firm. For the financial year 2018-19, pursuant to a show cause notice dated 16-11-2023 under section 73(1) of the GST Act, an order dated 06-03-2024 was issued, imposing a huge liability. The proceeding that resulted in the above-referred order was allegedly preceded by a notice dated 03.07.2023 as well, intimating certain discrepancies in the return filed. Petitioner pleads that neither of the two notices mentioned above nor the order of determination were served on the petitioner and that it was unaware of the proceedings until intimation of the recovery proceeding was uploaded in the portal. According to the petitioner, the show cause notice came to the knowledge of the petitioner much later, as it was uploaded in the tab for ‘Additional Notices and Orders’ and not that provided for ‘Notices and Orders’ in the portal. Since petitioner had no reason to verify the tab for ‘Additional Notices and Order
The court held that lack of proper service of notice due to vagueness in the GST portal's structure violated the principles of natural justice.
Effective service of notice under the GST Act is critical, with failure to serve properly resulting in quashing of demand and recognition of violation of natural justice principles.
The court emphasized the necessity of effective notice service to uphold natural justice, ruling that failure to provide a fair opportunity to respond invalidates the impugned order.
The failure to provide valid notice and opportunity to be heard constitutes a violation of natural justice, necessitating quashing of ex parte orders under the GST Act.
The court held that service of notices via an online portal under an unusual column is insufficient, violating principles of natural justice, leading to the annulment of the ex parte order.
The service of show cause notices must comply with principles of natural justice, ensuring that parties are effectively notified and given opportunities for response before orders are finalized.
Effective communication of adjudication orders is essential for initiating limitation under GST laws, and electronic service via the Common Portal alone does not satisfy this requirement.
A Summary of Show Cause Notice cannot replace a proper Show Cause Notice, and failure to provide a hearing violates natural justice principles.
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