23.01.2024: Mere uploading of Notice u/s 74 on web portal subsequent to the date of cancellation of registration, is bad in law: Allahabad High Court

The Allahabad High Court in the case of M/S EASTERN MACHINE BRICKS AND TILES INDUSTRIES VERSUS STATE OF U.P. AND OTHERS vide No.- Writ Tax No. – 1507 of 2023 dated 08.01.2024, held that once the registration of the assesee is cancelled, any notice for proceedings under the Central Goods and Service Tax Act, 2017 shall be served on the address of the assesee. The Court observed that merely uploading notice on the web portal without any intimation to the assesee will vitiate any subsequent action as being bad in law.

In this case, the petitioner had cancelled its registration voluntarily on September 18, 2019, whereas the notice under Section 74 of the Act was given to it only by way of uploading the same on the web portal on a subsequent date. It was submitted that the notice, that has been issued, was issued in the year 2021 or in late December 2020 as the date fixed for hearing was January 12, 2021. It was argued that since petitioner's registration stood cancelled in 2019, it was not required to check the web portal. Further, the petitioner contended that the SIB report on the basis of which proceedings were initiated under Section 74 was never served upon the petitioner. It also argued that petitioner was not given a second opportunity to appear before the authorities before passing of the order.

Hence, the petitioner challenged order passed by Assistant Commissioner, State Tax, Sector-2, Fatehpur under Section 74 of the Central Goods and Services Tax Act, 2017 for the tax period 2018-19 and the subsequent appellate order dated passed by the Additional Commissioner, Grade-2, (Appeal)-III, State Tax, Prayagraj vide filing the present petition.

The Court observed that the observance of principles of natural justice is “sine qua non of due process, standing as an unwavering sentinel against the potential tyranny of unchecked power.”

The Court held that since the petitioner had cancelled its registration in 2019, the Department ought to have served the notice under Section 74 at the address of the petitioner.  Mere uploading the notice on the web portal, with the knowledge of cancellation of registration prevented the petitioner from appearing before the authorities. Therefore, the service of notice was vitiated and was bad in law.

Accordingly, the order under Section 74 and subsequent order of the appellate authority were set aside directing the petitioner to appear before the authority on 30th January for hearing. The Court directed the Department to serve a copy of the SIB report to the petitioner. 

The High Court while pronouncing its judgment, placed reliance upon Supreme Court judgment in the in Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise, Gauhati and others, Madhyamam Broadcasting Limited v. Union of India and others and State Bank of India and others v. Rajesh Agarwal and others to hold that “The common thread that runs across these judgments is that although the principle of audi alteram partem can evolve itself given the facts and circumstances of each case, its significance and applicability is universal. Audi alteram partem, which is a part of the doctrine of natural justice, finds its roots primarily in the constitutionally guaranteed ideal of equality.”

The complete judgment can be accessed at 2024 Taxo.online 32

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