Facts of the Case

The petitioner, Raja Muthukumar, challenged an assessment order dated 18.02.2025 passed for the tax period April 2020 to March 2021 by the Commercial Tax Officer, Kovilpatti Assessment Circle-I. The petitioner had closed his business as early as 30.09.2023 and applied for cancellation of his GST registration on 30.10.2023, which was cancelled on 06.11.2023. He also filed a GSTR-10 return on 18.11.2023 for the said tax period. Since the business stood closed and registration cancelled, the petitioner failed to notice the show cause notice in Form DRC-01 dated 27.11.2023, which culminated in the impugned assessment order. The petitioner had not replied to the DRC-01 notice and consequently suffered the impugned order.

Issues Involved

  1. Whether an assessment order passed pursuant to a show cause notice that the taxpayer, having closed business and had his registration cancelled, failed to notice, could be sustained.
  2. Whether the mode of service adopted under Section 169 satisfied the requirements of natural justice.
  3. Whether relief could be granted despite the petitioner's appeal before the Appellate Authority being filed marginally beyond the condonable period under Section 107.

Petitioner's Arguments

  • Reliance was placed on the Madhya Pradesh High Court decision in Concord Tieup Pvt. Ltd. v. State of Madhya Pradesh (W.P. No.26956 of 2022, dated 25.04.2023).
  • Reliance was also placed on the Madras High Court's own decision in Sakthi Steel Trading v. Assistant Commissioner (ST) (W.P. No.4122 of 2022, dated 29.01.2024), holding that where GST registration stands cancelled, service solely through the common portal/e-mail under Section 169(1)(c) may not come to the actual notice of the taxpayer, and the Department must additionally serve notice through another prescribed mode.

Respondent's Arguments

  • The Government Advocate submitted that the petitioner had already filed an appeal before the Appellate Authority on 18.07.2025, albeit with a marginal delay of about 30 days beyond the condonable period under Section 107, and did not oppose a direction to dispose of the appeal on merits.

Court Order / Findings

  • The Court reiterated its holding in Sakthi Steel Trading that, although Section 169(1)(c) validly recognises e-mail/portal-based service, small traders may not be equipped to track such communications, and the Department should, as a matter of prudence, serve at least one further notice through another mode before relying on an ex parte order.
  • Finding a violation of natural justice on facts, the Court set aside the impugned assessment order and remitted the matter for a fresh order on merits within 45 days.
  • The impugned order was directed to be treated as a corrigendum to the show cause notice, with the petitioner to file a reply within 30 days; failing which the relief would automatically stand vacated.

Important Clarification

  • Section 169(1)(c) validly recognises e-mail/portal service, but where a taxpayer's registration has been cancelled or he is otherwise unlikely to notice electronic communications, courts expect the Department to additionally attempt service through another mode under Section 169(1) before relying on an ex parte order.

Sections Involved

  • Section 169 of the CGST/TNGST Act, 2017 — prescribes modes of service of notices, orders and communications.
  • Section 107 of the CGST/TNGST Act, 2017 — governs the limitation period (including condonable period) for filing an appeal.

Decision – In Favour of

Assessee. The assessment order was set aside and the matter remitted for fresh adjudication after affording the petitioner an opportunity to reply, subject to compliance with the timelines fixed.

Case Details

Madurai Bench of the Madras High Court; W.P.(MD) No. 22304 of 2025 with W.M.P.(MD) No.17431 of 2025; Coram: Justice C. Saravanan; Order dated 14.08.2025.

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.