Section 73: HC set-aside attachment order over SCN and notice issued in improper manner

Facts of the Case:

The case revolves around a challenge to the Show Cause Notice (SCN) and the adjudication order, particularly regarding the attachment of the petitioner’s bank account. The primary issues in this case pertain to the principles of natural justice, the service of notice, and the petitioner’s opportunity to respond to the SCN.

The SCN was issued on July 26, 2023, under Section 73 of the CGST Act. The notice was not uploaded in the “view notices and orders” section but in the “view additional notices and orders” section of the portal.

Submissions by the Petitioner:-

The petitioner argued that he was unaware of the show cause notice and the adjudication order due to placed in improper manner on GST portal. The show cause notice was posted in the “view additional notices and orders” section instead of the “view notices and orders” section. As a result, he missed the notice and did not respond in time. Consequently, an ex parte adjudication order was issued, leading to the attachment of his bank account for Rs. 78,37,155.

The petitioner’s counsel contended that the show cause notice was non-compliant with statutory requirements, as it allotted merely 15 days to respond rather than the mandated 30 days. The counsel substantiated this claim with screenshots from the GST portal and referenced rulings from various courts that underscored the importance of proper service of notices.

Submissions by the department:-

The learned advocate for the respondents, argued that the petitioner was given 15 days to respond to the show cause notice, but the adjudication order was passed only after 30 days. The petitioner did not attempt to respond during this period. He contended that the petitioner did not suffer any prejudice since he could have responded even after the initial 15 days but before the order was passed under Section 73 (9) of the said Act. The adjudication order was issued 30 days after the show cause notice, so the claim of inadequate response time is invalid.

Regarding the visibility of the show cause notice and the adjudication order on the portal, counsel of respondent stated that the respondents have no control over this, as it is managed by the GSTN authorities. He further argued that the petitioner has an effective alternative remedy available and suggested that the Court allow the petitioner to approach the appellate authority.

Findings & Decision of  the   court:-

• It was acknowledged that there might have been some confusion due to the SCN being in the “view additional notices and orders” section. Without conclusively determining whether this constituted due service of notice, the court considered the potential confusion.
• The court allowed the petitioner to approach the appellate authority for redress. The attachment order dated February 21, 2024, was quashed as it could not be sustained.

The court recognized the principles of natural justice and the need for clear communication of notices. It granted the petitioner the opportunity to appeal, considering the confusion that may have arisen from the placement of the SCN in an unexpected section of the portal. The quashing of the attachment order underscores the importance of ensuring taxpayers are adequately informed and given a fair chance to respond.