Violation of Principles of Natural Justice and Non-Compliance of Service of GST Notices

by Miss. Zalak Sohilkumar Dalal

Background

Very few Sections are not amended till now in GST law and Section 169 is one of those sections of GST law. The Section 169 Service of Notice in Certain Circumstances is under Chapter XXI Miscellaneous of CGST Act, 2017 and Section 20 of IGST Act, 2017. Various judgement has been declared by Various High Court of India on Section 169. Let’s Discuss here in detail Sahulhameed Versus Commercial Tax Officer (2025) 26 Centax 362 (Mad.) W.P. (MD) Nos. 26481 and 27190 of 2024 a Judgement given by Madras High Court on 06-01-2025 by the Single Bench Judge K. Kumaresh Babu, J. on compliance of Section 169 of CGST Act, 2017.

Facts of the Case

1. The GST Department uploaded notices, including orders, on the web portal of the registered portal without any modes of communication such as email, post or SMS as prescribed under Section 169 of CGST Act, 2017.
2. Petitioner i.e, Mr. Sahulhameed are not well aware about the portal of the Department and due unawareness of the information technology, they had relied upon the practitioners for filing their returns in the portal of the Department.
3. The Practitioners have uploaded their phone numbers and e-mail IDs for receipt of alerts and that in most of the cases, the practitioners have not informed the assesses either the updation in the portal or the receipt of the e-mails which have kept the assesses in dark.

Issue Involved

• Whether notices/orders uploaded only on the GST portal, without alternative modes of communication (email, post, or SMS), violated the principles of natural justice under Section 169 (1)(a) to (c) of the CGST Act, 2017.

Petitioner’s contentions

1.  the Petitioner submitted that even though the provisions under Section 169 (1)(a) to (f) are disjunctive, they should be read conjunctively, failing which, the basic principles of natural justice would be violated. They submit that Clauses (a) to (c) of sub section (1) of Section 169 should be read as alternative.
2. Section 169 (1) of the Act should be read in such a manner that it effectively complies with the principles of natural justice. A reading of the same, which do not effectively comply the said principles, would only be a disadvantage to the assesses.

Respondent contentions

1. Learned Additional Government Pleader contended that service of notice through portal had already held a valid service by the learned Single Judge of this Court in a judgment reported in Pandidorai Sethupathi Raja Vs Superintendent of Central Tax, Chennai 2022 SCC online Mad 8986. The learned Judge while considering Section 144B of the Income Tax Act, which mandates that E-mail IDs or a phone numbers given by the assessee for SMS alerts at the time of registration would not obliterate a notice issued through portal, as the assessee is required to visit the portal once in a month for filing its returns. Hence, the said obligation of the assessee would cover the principles of natural justice. When the assesses have obligated to visit the portal, it is their duty to also look at the notices that had been issued through the portal and reply properly.
2. Further, reliance given upon the M. Satyanarayana v. State of Karnataka and another reported in 1986 (2) SCC 512 of the Hon’ble Apex Court, Section 169 should be read only disjunctively and not conjunctively and therefore, any modes that have been prescribed under Clause (a) to (f) if had been complied with by the Department, there can be no complaint of violation of principles of natural justice. Rule 149 of the GST Rules says that what has been provided is for updation of the notices by any electronic mode and not by registered post.
3. Respondent drawn the attention of the Court to Rule 52 of the TNGST Rules 1959, which deals with service of notices under 52 (1) (a) to (d) and relied upon the Division Bench judgment of this Court in interpreting Rule 52 and further affirmed by a Division Bench of this Court in the case of Singaravelar Spinning Mills (P) Ltd., v. State of Tamil Nadu & Another reported in 2010 SCC Online Mad 6454. and also relied upon the judgment in the case of Pee Bee Enterprises v. Assistant Commissioner and Another reported in 2020 SCC Online Ker 3331, 2020 SCC Online MP 4650, a judgment of learned Single Judge of Punjab and Haryana High Court made in CWP 10560 & 10568 of 2021, dated 30.01.2021 in support of their contention that a notice served through portal is a sufficient notice.
4. Further, relied upon the Division Bench of this Court in the case of V.N.V. Builders Pvt., Ltd., v. State Tax Officer & Other reported in 2024 SCC Online Mad 4927 to say that these issues can also be raised before the Appellant Authority where there is an efficacious alternative remedy that is available to the respective assesses.

Court’s Observation

1. Rule 52 of the TNGST Rule 1959 provided for service of notices on the assesses. It is considered by the two Division Bench of this Court. Firstly, in the judgment reported in 1972 SCC Online Mad 347, The Division Bench held that the authority have to comply with any of the three modes under (a), (b) & (c) of Rule 52 and if found such service was not effective, then the Clause (d) of Rule 52 have to be complied.
2. A similar view had been taken by a subsequent Division Bench in a judgment in the case of Singaravelar Spinning Mills (P) Ltd., v. State of Tamil Nadu and Another reported in 2010 SCC Online Mad 6454. The Division Bench in the said judgment had also taken note of the earlier Division Bench indicated supra, wherein, the Division Bench held that the mode of service referred to under Clause (a) to (c) are only alternative and not cumulative and that any one of the modes have to be exhausted before proceeding under Rule 52 (d). For better appreciation, relevant paragraphs are extracted hereunder:

Para 9.

Having heard the learned counsel for the respective parties and having perused section 31 of the TNGST Act and and rule 52(1) of the Rules made thereunder, we are not inclined to accede to the submissions of the learned counsel for the petitioner that only after resorting to the service of notice in person, service through registered post was permissible. A reading of rule 52(1), makes it clear that the set of expressions in the first part of rule 52(1), viz., “may be effected in any of the following ways” makes it amply clear that the service of notice on a dealer can be resorted to by any one of the modes specified in rule 52(1)(a), (b), (c). Only sub-rule 52(1)(d) specifies that if none of the modes provided under rule 52(1)(a), (b), (c) is practicable, the alternative mode of affixing notice in some conspicuous place at the last known business or residence can be resorted to. As far as the modes of service specified in rule 52(1)(a), (b), (c) are concerned, it is for the authorities concerned to resort to anyone of the modes specified therein.

• The decision in State of Tamil Nadu v. Blue Mountain Hosieries reported in [2003] 133 STC 80 (Mad) fully supports the above said view, wherein the earlier decision of this court in A. Sanjeevi Naidu v. Deputy Commercial Tax Officer [1973] 31 STC 377 (Mad.) referred, wherein it has been held as under (page 378 in 31 STC) : “The modes of service referred to in clauses (a) to (c) are only alternative and not cumulative and, therefore, it cannot be said that all the above three modes have to be exhausted before the service by affixture can be effected under clause (d). Therefore, the assessing authority was justified in proceeding to serve the assessment order by affixing it in the petitioner’s place of business under rule 52(d)”.
• In the Section 169(1), a learned Single Judge of this Court in a judgment in the case of Pandidorai Sethupathi Raja v. Superintendent of Central Tax, Chennai reported in 2022 SCC Online Mad 8986 held that it is the obligation of the assessee to visit the portal and therefore, posting of summons and orders through portal is a sufficient compliance of notice on the assessee and therefore, there is no necessity for any alert. The learned single Judge had also compared the explanation of (r) to (u) of Section 144B of the Income Tax Act which had mandated an alert either to the registered e-mail ID of the assessee or by way of SMS to the registered mobile number of the assessee.
• Court observed that Clause (d) of Rule 52 and Section 169(1)(f) are PariMateria. Rule 52 had been dealt with by a Division Bench of this Court as early as in the year 1972 and had held that Clauses (a), (b) & (c) are alternative and if any of the aforesaid modes is not practicable then Clause (d) ought to have been followed.
• A conjoined reading of Sub-Section (1),(2) & (3) of Section 169 makes it clear that the State is obliged to comply with the Clauses (a) to (c) alternatively and thereafter, comply with Clauses (d) to (f). Further, even though Clause (f) has also been proceeded with the word ‘or’ indicating it to be disjunctive / an alternative mode of services, Clause (f) could be resorted to by the State, if any of the Clauses preceding it, was not practicable. Here also, Clause (f) makes it imperative that such affixure shall be in a conspicuous place and the last known business or residence of the asseesse. Therefore, the object of Section 169 is for strict observance of the principles of natural justice.
• Argument was made on behalf of the respondent that Rules 149 of the GST Rules only provides for electronically issuing of notices/ summons/ orders which is having persuasive value in eyes of law. Rules are creature of a Statute and the Rules cannot circumscribe the mode that had been provided under the Statute. When the Statute had also mandated issuance of notice in person/ registered post/ e-mail, etc., the Rules cannot be limited to only serving it through electronic modes. Therefore, the contention that the Rules will prevail over the Statute cannot be accepted.

Verdict Declared By The Hon’ble High Court

1. Section 169 mandates a notice in person or by registered post or to the registered e-mail ID alternatively and on a failure or impracticability of adopting any of the aforesaid modes, then the State can, in addition, make a publication of such notices/ summons/ orders in the portal/ newspaper through the concerned officials.
2. Therefore, The Writ Petition allowed and setting aside the impugned assessment orders and remitting the same back to the respective respondents to comply with the directions.
3. There shall be no order as to costs.

Conclusion

The above writ petition is in the favour of assessee. Although Rule 142(5) of the CGST Rules, 2017 prescribes that Order under Section 73, Section 74, section 76, section 129 or, section 130 of the CGST Rules, 2017 shall be uploaded electronically on the common portal. Here, it should be taken in mind that Rules could not curtail what has been prescribed in the Statute. Later on, In the Udumalpet Sarvodaya Sangham Versus Authority (2025) 26 Centax 367 (Mad.) Madras High Court held that Order to be set aside as revenue had uploaded notices/orders on web portal and not served them through any other modes reason being Since section 169 mandates a notice in person or by registered post or to registered e-mail ID alternatively and on a failure or impracticability of adopting any of aforesaid modes, then State can, in addition, make a publication of such notices/summons/orders in portal/newspaper through concerned officials. The same view which is taken in above writ i.e. Sahulhameed Versus Commercial Tax Officer (2025) 26 Centax 362 (Mad.) by the same judge has been taken. In the M. Vimalraj Versus Union Of India (2025) 27 Centax 155 (Mad.) the Madras High court Single Bench delivered decision and it is by same Judge K. Kumaresh Babu, J. and it followed Udumalpet Sarvodaya Sangham vs. Authority — (2025) 26 Centax 367 (Mad.) [06-01-2025] — Followed [Para 3].

This article is a part of Article Writing Competition 2025.