Allahabad High Court: No Duty to Monitor GST Portal After Cancellation of Registration
Background of the Dispute
The Allahabad High Court in AWE Global Logistics Vs State of U.P. examined the legality of a demand order issued under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017, in a situation where the assessee’s GST registration had already been cancelled.
The writ petition was instituted under Article 226 of the Constitution of India challenging the order dated April 30, 2024 passed by the Assistant Commissioner, State Tax, U.P., Lucknow, who had initiated proceedings under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter, “the Act”).
Key factual foundation:
- The registration of the assessee under the Act stood cancelled with effect from June 1, 2018.
- The assessee maintained that after such cancellation, it had ceased business activities.
- Despite this, the department initiated proceedings under
Section 73by uploading a show cause notice (SCN) merely on the GST portal. - Based on this electronically uploaded notice, the impugned order dated April 30, 2024 under
Section 73was passed.
The core issue before the Court was whether service of a show cause notice exclusively through the GST portal, after cancellation of registration, satisfies the requirement of proper service and principles of natural justice.
Assessee’s Contentions
No continuing obligation to check GST portal after cancellation
The assessee argued that once its GST registration had been cancelled on June 1, 2018, it could not be expected to continue monitoring the GST portal on a regular basis. According to the assessee:
- The obligation to remain active on the GST portal flows from an operative registration and ongoing tax compliance.
- After cancellation of registration, such an obligation ceases, particularly when business operations are discontinued.
- Consequently, unilateral uploading of a show cause notice on the portal, without any additional mode of communication, could not be treated as valid service.
Need for alternative mode of service
The assessee further submitted that:
- In circumstances where registration stands cancelled, if the department intends to initiate proceedings such as those under
Section 73, it must serve the show cause notice through a proper alternative mode, such as:- physical service,
- registered/speed post, or
- any other statutorily recognized method ensuring actual or constructive intimation.
- Merely relying on portal-based communication, when the assessee is no longer a registered active user, results in denial of effective opportunity to respond.
Reliance on prior Allahabad High Court decision
To reinforce its position, the assessee relied on the decision rendered by a coordinate Bench of the Allahabad High Court in:
M/s Katyal Industries v. State of U.P. and others (Neutral Citation No. 2024:AHC:23697-DB)
In that matter, the Court had examined similar issues surrounding:
- mode of service of show cause notice, and
- adherence to principles of natural justice in GST proceedings.
The assessee contended that the ratio in M/s Katyal Industries v. State of U.P. and others should squarely apply, leading to invalidation of the impugned Section 73 order.