Facts of the Case

  1. Indo Electricals, the petitioner, approached the Kerala High Court challenging the assessment order marked as Ext.P6 for the assessment year 2017–2018 under the State Goods and Services Tax Act.
  2. The petitioner contended that the assessment order had been issued without affording an opportunity of personal hearing, even though such hearing had been specifically requested.
  3. The petitioner referred to the documents mentioned on the first page of Ext.P6 assessment order. Reference No. 7 therein related to a document bearing a number ending in 24051 and dated 18 October 2021.
  4. According to the petitioner, a combined reading of Ext.P6 and the GST portal screenshot produced as Ext.P8 indicated that the document at Reference No. 7 was only a communication requiring additional documents to be furnished by 27 October 2021.
  5. The petitioner asserted that Ext.P8 showed that a personal hearing had been requested, but the assessment order was nevertheless passed without granting such opportunity.
  6. It was further contended that although the portal screenshot reflected the notice referred to at Reference No. 7, no attachment was available and, therefore, the petitioner did not actually receive the notice in a manner that clearly communicated the scheduling of a personal hearing.
  7. The respondent authorities disputed this position and maintained that the relevant portal entry itself provided an opportunity of personal hearing.

Issues Involved

The principal issues before the Court were:

  1. Whether the GST assessment order could legally survive when it was not preceded by an effective opportunity of personal hearing despite the petitioner having requested such hearing.
  2. Whether the alleged personal hearing notice had been properly served upon the petitioner through the GST portal.
  3. Whether a portal entry, without adequate clarity or accessible attachment, was sufficient to communicate that a personal hearing had been fixed.
  4. Whether passing the assessment order in such circumstances amounted to violation of the principles of natural justice.
  5. Whether the impugned assessment order should be quashed and the matter remitted for fresh adjudication.

Petitioner’s Arguments

The petitioner submitted that:

  • The assessment order for the assessment year 2017–2018 had been issued without granting an opportunity of personal hearing, though such hearing had been specifically requested.
  • The document referred to at Serial/Reference No. 7 of Ext.P6 was, according to the material visible on the GST portal, only a communication requiring the petitioner to furnish additional documents by 27 October 2021.
  • A combined reading of Ext.P6 and Ext.P8 did not clearly establish that the communication was intended to fix a date for personal hearing.
  • The GST portal screenshot showed that the petitioner had requested personal hearing.
  • Despite the request, the assessment order was issued without actually granting such opportunity.
  • The portal showed no attachment in relation to the relevant notice and, therefore, the petitioner contended that the notice was not actually received in a proper and effective manner.
  • In the absence of a properly communicated hearing notice and an actual opportunity of hearing, the assessment order was unsustainable.

Respondent’s Arguments

The learned Senior Government Pleader, appearing for the respondents, contended that:

  • The portal details demonstrated that the notice referred to at Serial No. 7 of the impugned assessment order was not a notice requiring a separate attachment.
  • The communication was itself intended to provide the petitioner an opportunity of personal hearing.
  • The information available on the GST portal was sufficient for the petitioner to understand that personal hearing would be provided on the date mentioned therein.
  • The petitioner failed to avail the opportunity of personal hearing.
  • Having not availed the opportunity, the petitioner could not subsequently allege violation of the principles of natural justice.

Court Order / Findings

The Kerala High Court examined the facts and circumstances and recorded the following material findings:

  1. No Personal Hearing Preceded the Assessment Order:
    The Court was satisfied that the impugned Ext.P6 assessment order had not been preceded by any personal hearing.
  2. Notice Was Prima Facie Not Properly Served:
    The Court was also prima facie satisfied that the document referred to at Serial No. 7 had not been properly served upon the petitioner.
  3. Portal Information Was Not Sufficiently Clear:
    Ext.P8 suggested that the petitioner was not in a position to understand whether the relevant notice was intended to fix a date for personal hearing.
  4. Assessment Order Quashed:
    In view of these circumstances, the Court quashed Ext.P6 assessment order.
  5. Matter Remitted for Fresh Decision:
    The matter was remitted to the first respondent for fresh consideration and decision.
  6. Opportunity to Submit Additional Documents:
    The first respondent was directed to afford the petitioner an opportunity to submit any additional documents.
  7. Opportunity of Being Heard:
    The petitioner was also directed to be afforded an opportunity of hearing.
  8. Specific Appearance Direction:
    The petitioner was directed to appear before the officer at 11:00 A.M. on 9 November 2022, either personally or through an authorised representative.
  9. Fresh Adjudication in Accordance with Law:
    Thereafter, the matter was directed to be adjudicated in accordance with law.

Accordingly, the writ petition was disposed of.

Important Clarification

The judgment provides an important clarification on GST adjudication and electronic service through the GST portal:

A mere portal entry cannot automatically be treated as an effective opportunity of personal hearing where the communication is not properly served or where the information displayed is insufficiently clear to enable the taxpayer to understand that a specific date for personal hearing has been fixed.

The Court’s reasoning shows that the substance and effectiveness of communication are material. Where a taxpayer has requested personal hearing, the adjudication process must ensure that the hearing opportunity is genuinely and clearly communicated before an adverse assessment order is passed.

The decision further reinforces that procedural fairness is not satisfied merely by asserting that some information was available on the GST portal. The taxpayer must be placed in a position to reasonably understand the nature and purpose of the communication, particularly when it is claimed to be a notice fixing personal hearing.

Sections / Statutory Provisions Involved

State Goods and Services Tax Act

The assessment proceedings arose under the provisions of the State Goods and Services Tax Act for the assessment year 2017–2018.

Section 75(4) of the CGST/SGST Framework — Opportunity of Hearing

The controversy directly concerns the statutory principle embodied in Section 75(4), under which an opportunity of hearing is required where a request is received in writing from the person chargeable with tax or penalty, or where an adverse decision is contemplated against such person.

Section 169 — Service of Notice in Certain Circumstances

The dispute regarding whether the hearing notice was properly served through the GST portal is relevant to the statutory framework governing service of decisions, orders, summons, notices and other communications.

Section 61 / FORM GST ASMT-10 — Scrutiny-Related Background

The record of the case included a notice in FORM GST ASMT-10, which forms part of the factual and procedural background of the proceedings.

FORM GST DRC-07

The record also included a summary order in FORM GST DRC-07, issued following the assessment proceedings.

Key Legal Principle Emerging from the Case

Where a GST assessment order is passed without an actual personal hearing, despite a request for hearing, and the purported hearing notice is not properly served or is not sufficiently clear on the GST portal to communicate the fixing of a hearing date, the assessment order is liable to be quashed and the matter remanded for fresh adjudication after granting proper opportunity of hearing.

Practical Significance of the Judgment

This decision is significant for GST proceedings involving:

  • denial of personal hearing;
  • unclear GST portal communications;
  • absence of notice attachments;
  • disputed electronic service of hearing notices;
  • adverse assessment orders passed without effective hearing;
  • violation of principles of natural justice;
  • remand for fresh adjudication;
  • opportunity to submit additional documents before final determination.

Kerala High Court quashes GST assessment order in Indo Electricals vs Deputy Commissioner for denial of personal hearing and improper service of notice.

Link to download the order

https://www.mytaxexpert.co.in/uploads/1783323062_1217compressed.pdf

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