GST Officer Should Apply Mind to Ensure Proper Serving of SCN Before Passing Ex parte Order: HC
The present writ petition (W.P.No. 24161 of 2025) dated July 07, 2025, has been filed by Tvl. Raju Enterprises before the Madras High Court, Justice Krishnan Ramasamy, under Article 226 of the Constitution of India. The petitioner is a business represented by its proprietor, Mr. Balakrishnan, located in Vadalur, Cuddalore, Tamil Nadu. Deputy State Tax Officer (1st Respondent), Deputy Commissioner (ST) (2nd Respondent), and Branch Manager, Canara Bank (3rd Respondent) are the legal respondents in this case.
The writ petition has been filed to challenge a GST assessment order dated January 8, 2024 (reference number ZD3301240332623) and an appellate order (reference number ZD330225251196M) dated February 25, 2025. The petitioner is asking the court to quash both the orders and to unlock their bank account.
What Orders Were Challenged?
- The GST assessment order was issued to the petitioner in Form DRC-07 on January 8, 2024, by the Deputy State Tax Officer (1st respondent).
- The appeal against this order was dismissed by the Deputy Commissioner (ST) (2nd Respondent) on February 25, 2025, because it was 29 days late.
- The petitioner also argued that their bank account was frozen, and they could not access their funds.
What Went Wrong?
- A show cause notice (SCN) was issued to the petitioner by the GST Department for the assessment year 2018-19. The SCN was only uploaded on the GST portal. No physical copy of the notice was served.
- The petitioner was unaware of the notice, hence missed the chance to respond.
- When the petitioner tried to file an appeal, it was rejected, as it was filed 29 days late.
- The petitioner asked the court to award them a second chance, and they are ready to pay 25% of the disputed tax voluntarily if the order is quashed.
Court’s Observation
The court observed various aspects of the case and came up with the following points:
- Although uploading a notice on the GST portal is a legal and acceptable way, it should be used with caution. However, the department could have used other methods, such as sending a physical copy by post. Even Section 169 of the GST Act lists various methods that can be used if an individual does not respond.
- Simply fulfilling the formality of uploading a notice isn’t enough. If the taxpayer doesn’t respond, the officer should try other methods to ensure the notice was actually received.
- If officers only follow technical procedures without proper communication, it leads to unnecessary court cases, wasting time and resources of both tax officials and courts.
Order of Court
After understanding all the aspects, the court granted a second chance to the petitioner and passed the following directions:
- The assessment order issued on January 8, 2025, is set aside.
- The case is sent back to the Appellate Authority for a fresh review.
- The petitioner must deposit 25% of the disputed tax within 4 weeks.
- The petitioner must submit a reply with supporting documents within 2 more weeks.
- The court has asked the first respondent to give the petitioner a time of 14 days’ clear notice for a personal hearing. The officer must then pass a new order, based on merit and law.
- Once the petitioner submits proof of 25% tax payment, the tax officer must instruct the Canara Bank (3rd respondent) to unfreeze the petitioner’s bank account immediately.