Calcutta High Court Sets Aside GST Assessment Order Due to Improper Service of Notice via Portal and Denial of Personal Hearing

Overview of the Case

In a significant ruling emphasizing procedural compliance and natural justice in GST assessments, the Calcutta High Court quashed an ex parte assessment order in the matter of Phuljhora Agro Plantation Pvt. Ltd. & Anr. Vs The Union of India & Ors. The Court found serious procedural lapses in the manner in which the GST department conducted the assessment proceedings, particularly concerning the service of notices and the opportunity of personal hearing.

The judicial pronouncement addresses critical issues related to the proper mode of communication of notices under the Goods and Services Tax framework and reinforces the fundamental principle that no adverse order can be passed without affording adequate opportunity of being heard to the assessee.

Factual Matrix of the Dispute

The matter arose from an ex parte assessment order dated 02.11.2023 passed by the third respondent authority exercising powers under Section 74 of the GST Act. Through this order, the department raised a tax demand aggregating to ₹5,26,832, which included both tax liability and penalty components.

The assessment pertained to the period spanning from July 27, 2017, through March 2019, covering transactions of the financial year 2017-2018. The assessee company challenged the validity and legality of this assessment order through writ proceedings before the Calcutta High Court.

Contentions Raised by the Assessee

Procedural Violations in Issuance of Notice

The petitioning company raised multiple grounds challenging the impugned assessment order. The primary contention centered on the issuance of the show cause-cum-demand notice dated 19.05.2023, which allegedly suffered from fundamental procedural defects.

According to the assessee's submissions, no preliminary notice in Form GST ASMT-10 was ever issued in accordance with the mandate of Section 61 of the GST Act before the show cause-cum-demand notice was issued. This omission constituted a significant departure from the statutory framework governing assessment procedures.

Violation of Adjournment Provisions

The petitioners argued that the respondent authorities failed to grant any adjournment during the proceedings, which was contrary to the provisions of Section 75(5) of the GST Act. This section mandates specific procedures to be followed when adjournments are sought or when matters are adjourned by the adjudicating authority.

Denial of Opportunity of Personal Hearing

A crucial ground of challenge was the complete denial of opportunity of personal hearing before passing the adverse assessment order. The assessee contended that the adjudicating authority proceeded to pass the order without serving any notice of hearing, thereby violating the fundamental principles of natural justice enshrined in the Constitution of India and the GST statute itself.

Improper Upload of Notice on Portal

The assessee made a specific assertion regarding the improper manner of uploading the show cause notice on the GST portal. It was contended that the notice was erroneously uploaded in the 'Additional Notices order tab' instead of the appropriate 'view notices order tab' on the common portal.

This improper upload, according to the petitioners, rendered the communication defective and contrary to the provisions of Section 169 of the GST Act, which prescribes the manner of service of notice and other communications under the statute.

Absence of Physical Service

The petitioners emphasized that the show cause notice dated 19.05.2023 was never physically served upon them through registered post or electronic mail. They asserted that the department failed to produce any documentary evidence establishing effective service of the notice through conventional modes of communication.

Judicial Precedents Supporting Assessee's Case

To substantiate their arguments, the assessee's counsel relied upon two binding precedents of the Calcutta High Court that dealt with similar issues of improper service through the GST portal.

St Xaviers College Calcutta Alumni Association case

In the matter of St Xaviers College Calcutta Alumni Association vs. Dy. Commissioner of Revenue CGST reported at (2025) 173 Taxmann.Com 417 (Calcutta), the Court had categorically held that when intimations, show cause notices, and orders were placed by the department on the GST portal in the "Additional Notices and Orders" tab without proper communication through normal modes, such notices and consequent orders were liable to be quashed.

The relevant observation from Paragraph 5 of that judgment stated:

"As the intimation dated 18th May, 2023, Show Cause Notice dated 9th June, 2023 and the Order dated 12th July 2023 were all placed by the respondents on the GST portal in the 'Additional Notices and Orders' tab and were not communicated properly to the petitioner through the normal mode of communication, the above intimation Show Cause Notice and Order dated 12th July, 2023 as quashed and set aside."

Goutam Bhowmik case

The second precedent cited was Goutam Bhowmik vs. State of West Bengal reported at (2024) 158 Taxmann.Com 399 (Calcutta), which addressed the mandatory nature of granting opportunity of personal hearing when an adverse decision is contemplated.

The Court in that case had observed in Paragraph 9:

"From perusal of Section 75(4) of the Act, 2017 it is evident that opportunity of hearing has to be granted by authorities under the act, 2017 where either a request is received from the person chargeable with tax or penalty for opportunity of hearing or where any adverse decision is contemplated against such person. Thus, where an adverse decision is contemplated against the person, such a person even need not to request for opportunity of personal hearing and it is mandatory for the authority concerned to afford opportunity of personal hearing before passing an order adverse to such person."

Furthermore, addressing the question of availability of alternative remedy, the Court in Paragraph 12 had held:

"So far as the objection raised by learned Advocate for the respondents with regard to the availability of statutory remedy of the appeal under Section 107 of the WBGST/CGST Act, 2017 is concerned, we find that once the order has been passed by the proper officer in complete breach of statutory mandate contained in Section 75(4) of the WBGST Act, availability of alternative remedy on facts of the case would not be a complete bar while entertaining the writ petition under Article 226 of the Constitution of India."