Somaprasanth Karampudi Vs Union of India and Others (Andra Pradesh High Court)

Summary: In Somaprasanth Karampudi v. Union of India (Writ Petition No. 14969/2024), the Andhra Pradesh High Court remanded the case due to improper service of notices. The Petitioner’s GSTIN was canceled, and a demand notice was sent via email, with physical notices later returned marked “Left”. The Court noted that the Respondent should have made additional efforts to locate the Petitioner after these returns, rather than relying solely on email communications. Given the potential for missed emails due to registration cancellation, the Court found that the principles of natural justice were not observed. Consequently, the Court set aside the earlier order and remanded the case for proper adjudication, emphasizing the necessity for adequate notice service as stipulated by Section 169 of the CGST Act.

Introduction: The Hon’ble Andra Pradesh High Court in Somaprasanth Karampudi v. Union of India and Others [Writ Petition No. 14969/2024 dated July 29, 2024] remanded the writ petition and held that physical notices sent to the Petitioner being returned with noting “Left”, should have been sufficient for the Respondent to take steps to ascertain whereabouts of the Petitioner and to serve notices at such address. Though it cannot be said that service of notice on the Petitioner by way of E-Mail ID had not been done, the fact remained that cancellation of registration could have resulted in the Petitioner not looking into mails sent to E-Mail ID, which was registered with the Respondent. Given the ambiguity, it would only be appropriate to give an opportunity to the Petitioner to set out the case. Accordingly, the writ petition was allowed, setting aside the Impugned order for adjudication.

Facts:

The GSTIN of M/s. Somaprasanth Karampudi (“the Petitioner”) was cancelled by an order of cancellation of registration dated February 21, 2019 w.e.f. March 09, 2019 by the Revenue Department.  Thereafter, the Deputy Solicitor General of India (“the Respondent”) took up assessment of the taxes due for the period October 2017 to March 2019. A show cause notice dated April 22, 2022 is said to have been prepared and sent to the petitioner, calling upon the Petitioner to show cause why Rs. 46,77,312/- should not be recovered from the petitioner under Section 74 (1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). No reply was received from the Petitioner in this regard, despite service of this notice on the E-Mail ID of the Petitioner in terms of Section 169 of the CGST Act.

As no reply had been received by the Petitioner, further notices were issued for personal hearing. These notices dated September 27, 2022, October 06, 2022 and October 18, 2022 are said to have been sent under Registered Acknowledgment Due and all these notices were returned with the noting “Left” by the postal authorities. In view of the lack of response by the Petitioner, the Respondent confirmed the demand by way of an order dated December 21, 2022 (“the Impugned Order”). Thereafter, the Respondent also issued a notice of attachment dated May 02, 2024, in relation to the property.

The Petitioner being aggrieved by the Impugned Order of the Respondent and the consequential attachment proceedings, has approached this Court, by way of the present Writ Petition, raising various contentions.

Issue:

Whether the Assessee obligated to check the mail sent to E-Mail ID, which was registered on the GST Portal after GST Registration Cancellation?

Held:

The Hon’ble Andra Pradesh High Court in Writ Petition Nos. 14969/2024 held as under:

• Noted the main contention of the Petitioner that none of the notices, that are said to have been sent by the Respondent, had been received by the Petitioner and as such the Petitioner had no notice of any of the proceedings and the Impugned Order suffers from violation of principles of natural justice.
• Observed that, the fact that the physical notices sent to the Petitioner being returned with the noting “Left” should have been sufficient for the Respondent to take steps to ascertain the whereabouts of the Petitioner and to serve notices at such address. though it cannot be said that service of notice on the Petitioner by way of the E-Mail ID has not been done, the fact remains that the cancellation of the registration could have resulted in the petitioner not looking into the mails sent to the E-Mail ID which was registered with the department.
• Held that, it would be appropriate to give an opportunity to the Petitioner to set out his case. Accordingly, the Writ Petition is allowed, setting aside the Impugned Order of the Respondent and remanding it back for adjudication.

Our Comments:

The department should service of notice through registered post or speed post or courier or communication to the taxpayer through the e-mail address provided at the time of registration or as amended from time to time with acknowledgment to the taxpayer at their last known place of business or residence and upload the same in the web portal.

Section 169 of the CGST Act mandates service of notice in certain circumstances, which is reproduced below:

“(1) Any decision, order, summons, notice or other communication under this Act or the rules made thereunder shall be served by any one of the following methods, namely:-

(a) by giving or tendering it directly or by a messenger including a courier to the addressee or the taxable person or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxable person; or

(b) by registered post or speed post or courier with acknowledgement due, to the person for whom it is intended or his authorised representative, if any, at his last known place of business or residence; or

(c) by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or

(d) by making it available on the common portal; or

(e) by publication in a newspaper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain; or

(f) if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence and if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the office of the concerned officer or authority who or which passed such decision or order or issued such summons or notice.”

Recently, in numerous cases, the High Courts have adopted a lenient stance toward taxpayers where notices were not responded to due to legitimate reasons. Additionally, the GST Portal has introduced a revamped design of the “Notices and Orders” tab, significantly enhancing user experience. This update is intended to streamline access to vital regulatory information, offering a more intuitive interface for individuals and businesses engaged in GST compliance.

The Hon’ble Madras High Court (Madurai Bench) in the case of M/s. Tvl. Diamond Shipping Agencies Pvt. Ltd. v. Assistant Commissioner, Tuticorin [W.P. (MD) 6874 of 2023 dated August 29, 2023] allowed the writ petition and held that an assessment order could not be passed without serving notice as per the conditions stipulated in Section 169(1)(b) of the CGST Act.

The Hon’ble Delhi High Court in Anhad Impex v. Assistant Commissioner [Writ Petition (Civil) No. 2356 OF 2024 dated February 16, 2024] held that merely uploading SCN under the category “Additional Notices” instead of “Notices” on the GST portal does not constitute sufficient intimation to the taxpayer. Consequently, the subsequent demand order passed without giving the petitioner a proper opportunity to respond to SCN was set aside, and the court directed that SCN be re-adjudicated after affording a proper opportunity of hearing to the petitioner.

In a recent case, the Allahabad High Court in M/s Virender Kumar Projects Pvt Ltd v. State of U.P. And 2 Others [Writ Tax No. – 945/2023 & 954/2023] has asked the State to explain “as to how and under what manner, the deeming service as per clauses (c) & (d) of sub-section (1) of section 169 can be said to be deemed service as per sub-section (2) of section 169 of the GST Act.”

Section 169(1) of the GST Act lays down acceptable modes of services, i.e., by registered post or speed post, communication on e-mail, making available on the common portal, by publication in a newspaper or by affixation. If service is made by way of Section 169(1), then the order is deemed to be served under Section 169(2).

The Petitioner argued that service through email and through the common portal are not deemed to be service under Section 169(2). Thus, the challenge to the order dated December 03, 2021 was within limitation as the date of communication was March 22, 2023. While granting time to the State i.e. the Respondent to file a counter affidavit has sought specific averments as to whether service of an order deemed to be made by email or by the posting of the common portal be treated as an order served under Section 169(2) of the GST Act. This matter is pending for further hearing.

FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT

The petitioner was a registered dealer under the Central Goods and Services Tax Act, 2017(herein referred to as the “CGST Act, 2017”). It appears that the said registration was cancelled by an order of cancellation of registration dated 21.02.2019 with effect from 09.03.2019.

2. Thereafter, the 3rd respondent took up assessment of the taxes due for the period October 2017 to March 2019. A show cause notice dated 22.04.2022 is said to have been prepared and sent to the petitioner, calling upon the petitioner to show cause why Rs.46,77,312/- should not be recovered from the petitioner under Section 74 (1) of the CGST Act r/w Section 20 of the Integrated Goods and Services Act, 2017 (herein referred to as “IGST Act 2017”), interest as applicable on the aforesaid amounts and equivalent penalty under Section 74 (1) of the CGST/ SGST Act r/w Section 122 of the CGST Act along with Section 20 of the IGST Act, 2017. No reply was received from the petitioner in this regard, despite service of this notice on the E-Mail ID of the tax payer on 18.05.2022 and 19.05.2022 in terms of Section 169 of the CGST Act, 2017.

3. As no reply had been received, further notices were issued for personal hearing. These notices dated 27.09.2022, 06.10.2022 and 18.10.2022 are said to have been sent under Registered Post with Acknowledgment Due and all these notices were returned with the noting “Left” by the postal authorities. In view of the lack of response by the petitioner, the 3rd respondent is said to have taken up the assessment proceedings on the merits of the case and had confirmed the demand proposed in the show cause notice dated 22.04.2022, by way of an order dated 21.12.2022 bearing Order in Original No.NLR-DC-07-2022-23-GST with DIN No.20221 255YK0000000F76.

4. The 4th respondent, in implementation of the order dated 21 .12.2022, had issued a notice of attachment dated 02.05.2024 in relation to the property bearing house No.2-1 -7, Gaddala Gunta, Revenue Ward No.2, Ongole, Prakasam District.

5. The petitioner being aggrieved by the impugned order of the 3rd respondent bearing No.NLR-DC-07-2022-23 GST with DIN No.20221255YK0000000F76 dated 21.12.2022 and the consequential attachment proceedings of the 4th respondent dated 02.05.2024, has approached this Court, by way of the present Writ Petition, raising various contentions.

6. For the purpose of this writ, the main contention that is now being considered by this Court is the question of violation of principles of natural justice. The case of the petitioner is that none of the notices, that are said to have been sent by the 3rd respondent, had been received by the petitioner and as such the petitioner had no notice of any of the proceedings and the impugned order suffers from violation of principles of natural justice.

7. Smt. Santhi Chandra, learned counsel appearing for the official respondents would submit that though notices sent physically may not have been received by the petitioner, the fact remains that notices sent to the registered E-Mail ID of the petitioner have been received in the said E-Mail ID and consequently, it must be held that such notices have been received by the petitioner. She would submit that, in such circumstances, there is no violation of the principles of natural justice.

8. The admitted fact is that the registration of the petitioner had been cancelled on 21 .02.2019 and all proceedings resulting in the impugned orders had commenced only after the said cancellation of registration. It may also be noted that the registration had been cancelled on the ground that the petitioner was not filing GST returns. These facts coupled with the fact that the physical notices sent to the petitioner being returned with the noting “Left” should have been sufficient for the 3rd respondent to take steps to ascertain the whereabouts of the petitioner and to serve notices at such address. Though it cannot be said that service of notice on the petitioner by way of the E-Mail ID has not been done, the fact remains that the cancellation of the registration could have resulted in the petitioner not looking into the mails sent to the E-Mail ID which was registered with the department.

9. In view of the aforesaid ambiguity, it would only be appropriate to give an opportunity to the petitioner to set out his case. Accordingly, the Writ Petition is allowed, setting aside the order of the 3rd respondent dated 21.12.2022 and remanding it back to the 3rd respondent for adjudication.

10. In view of the fact that the petitioner is now aware of the order passed by the 3rd respondent, the present proceedings shall be treated as notice of the pending assessment before the 3rd respondent and the show cause notice dated 22.04.2022 as well as the impugned order dated 21.12.2022 shall be treated as show cause notices and the petitioner is granted three (03) weeks time to file his response to these notices. Thereafter, a personal hearing shall be given to the petitioner on 21.08.2024 by the 3rd respondent. In the event of any further time being sought by the petitioner, the same shall be sought by giving the E-Mail ID and the address at which the petitioner can be contacted and notices can be served on the petitioner.

11. In view of the fact that the petitioner has approached this Court at such a belated time, it would also be appropriate that the petitioner shall pay 10% of the disputed tax alone as a pre-condition for being permitted to file his objections. There shall be no order as to costs.

As a sequel, interlocutory applications pending, if any shall stand closed.

(Author can be reached at [email protected])