Facts of the Case

This intra-court appeal (MAT/1371/2023) by National Plastic Household Products Private Limited was directed against an order dated 19th July 2023 passed by the Single Bench in WPA 14980 of 2023. In the writ petition, the appellant had challenged an adjudication order dated 4th May 2023 passed under Section 74(9) of the WBGST Act, 2017. The principal grievance was violation of natural justice: the summary of the show cause notice was uploaded on one portal/tab of the GST system while the actual show cause notice was uploaded on a different portal/tab, and the appellant remained unaware of the notice. This factual position was not disputed by the State. The impugned order had referred to the reply filed at the pre-show cause notice stage and recorded that no reply had been filed to the show cause notice itself in Form GST DRC-01. The Court also noted that more than Rs. 82 lakhs had already been recovered from the appellant pursuant to the impugned demand.

Issues Involved

  1. Whether uploading the summary of the show cause notice and the show cause notice itself on different portals/tabs, leaving the appellant unaware, vitiates the Section 74(9) order for breach of natural justice.
  2. Whether the appellant should be granted a further opportunity to submit objections on merits.
  3. Whether recovery of a substantial sum during pendency warranted expeditious adjudication.

Petitioner's Arguments

  • The summary of the show cause notice was uploaded on one portal/tab and the actual show cause notice under Form GST DRC-01 on a different tab, so the appellant never came to know of the notice.
  • The pre-show cause notice reply already furnished had been wrongly treated as satisfying the requirement, while no real opportunity was given to respond to the actual show cause notice.
  • This bifurcated and confusing manner of uploading notices amounted to a violation of principles of natural justice vitiating the order dated 4th May 2023.

Respondent's Arguments

  • The State did not dispute that the notice summary and the notice itself were placed on different portals/tabs.
  • It was pointed out that the impugned order had already taken note of the pre-show cause notice reply and had recorded the absence of any reply to the formal show cause notice in Form GST DRC-01.

Court Order/Findings

  • Considering the peculiar facts, the Division Bench held that one more opportunity ought to be granted to the appellant to submit objections on merits rather than leaving the natural justice defect unaddressed.
  • The appeal was disposed of by directing that the order dated 4th May 2023 passed under Section 74(9) of the WBGST Act, 2017 be treated as a show cause notice, with the appellant's reply to be filed within three weeks of receiving the server copy of the order.
  • The authority was directed to grant a personal hearing thereafter and pass fresh orders on merits and in accordance with law.
  • Since more than Rs. 82 lakhs had already been recovered, the adjudicating authority was directed to adjudicate the matter expeditiously.

Important Clarification

Where the summary of a show cause notice and the show cause notice itself are uploaded on different tabs of the GST portal such that the notice effectively escapes the assessee's attention, and no reply is consequently filed, courts will treat this as a breach of natural justice. Rather than quashing the demand outright, the usual remedy is to convert the existing order into a fresh show cause notice and grant the assessee a real opportunity to reply and be heard, especially where recovery has already substantially proceeded.

Sections Involved

  • Section 74(9), WBGST Act, 2017 — requires the proper officer, after considering the assessee's representation, to determine tax, interest and penalty and pass a reasoned order in fraud/suppression cases.
  • Form GST DRC-01 / DRC-01A — the prescribed statutory forms for the show cause notice and the pre-notice intimation of ascertained tax liability.

Decision – In Favour of

The appeal was disposed of with directions, in favour of the Assessee to the extent that the natural justice defect was corrected and a fresh opportunity to be heard was granted; the Court did not record any finding on the merits of the underlying tax demand, which remains to be decided afresh by the adjudicating authority.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court at Calcutta
  • Case No.: MAT/1371/2023
  • CNR: Not available
  • Coram: Chief Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya
  • Decision Date: 18 October 2023
  • Disposal Nature: Disposed of; treated as fresh show cause notice

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