Eastern Machine Bricks & Tiles Industries vs State of Uttar Pradesh

Service of GST notice by just uploading it on GST Portal on a cancelled GST Registration is not valid: Allahabad High Court As the Petitioner has cancelled his registration, they are not required to check the web portal. In such cases, the notice should be sent to the address of the assessee. Due to the non-service of the notice, the assessee was prevented from appearing in hearing in the original proceedings, and an ex-parte impugned order was passed. High Court quashed and set aside with a direction to respondent authority to grant an opportunity of hearing to assessee, and after hearing parties reasoned, the order was to be passed the Order.

1. This is a writ petition under Article 226 of the Constitution of India, wherein the petitioner is aggrieved by order dated September 14, 2021 passed by Assistant Commissioner, State Tax, Sector-2, Fatehpur under Section 74 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the Act”) for the tax period 2018-19 and the appellate order dated October 5, 2023 passed by the Additional Commissioner, Grade-2, (Appeal)-III, State Tax, Prayagraj.

2. The first ground taken by the learned counsel for the petitioner is that the petitioner had cancelled its registration voluntarily on September 18, 2019, whereas the notice under Section 74 of the Act was given to it only by way of uploading the same on the web portal on a subsequent date. He submits that the notice, that has been issued, was issued in the year 2021 or in late December 2020 as the date fixed for hearing was January 12, 2021. He further submits that as the petitioner had already cancelled its registration voluntarily, it was not required to check the web portal. Further ground has also been taken by the learned counsel for the petitioner with regard to the respondent No.3 proceeding on the basis of a Special Investigation Branch report (SIB report) behind the back of the petitioner without providing a copy of the same to the petitioner. He further states that the appellate authority also did not grant a second opportunity of hearing to the petitioner. He submits that the date fixed for hearing was August 22, 2023, on which date the petitioner could not appear. Subsequently, the appellate authority passed an order on October 5, 2023 dismissing the appeal of the petitioner on the ground that none appeared on behalf of the petitioner and reaffirming the order passed by Assistant Commissioner, State Tax/respondent No.3.

3. It is trite law that principles of audi alteram partem are required to be followed by the authority and giving a go by to the same results in violation of the principles of natural justice. One may examine the development of the law in relation to natural justice. The Division Bench of this Court in S.R. Cold Storage v. Union of India and Others reported in 2022 SCC online (All) 550; {[2022] 448 ITR 37 (All)} held as follows:

“25. The first and foremost principle of natural justice is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. It is an approved rule of fair play.

26. The principles of natural justice are those rules which have been laid down by the courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice.

27. The expression “civil consequences” encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life.

28. Natural justice has been variously defined by different judges, for instance a duty to act fairly, the substantial requirements of justice, the natural sense of what is right and wrong, fundamental justice and fair-play in action. Over the years by a process of judicial interpretation two rules have been evolved as representing the principles of natural justice in judicial process, including therein quasi-judicial and administrative process. They constitute the basic elements of a fair hearing, having their roots in the innate sense of man for fair-play and justice which is not the preserve of any particular race or country but is shared in common by all men. The first rule is “nemo judex in causa sua” or “nemo debet esse judex in propria causa sua” that is no man shall be a judge in his own cause. The second rule is “audi alteram partem”, that is, “hear the other side”. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, i. e., “he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right” or in other words, as it is now expressed, “justice should not only be done but should manifestly be seen to be done”. Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice.”

4. The Supreme Court, in the celebrated constitutional judgment in Mrs. Maneka Gandhi v. Union of India and another reported in (1978) 1 SCC 248, while dealing with a challenge laid to an order by which a passport was impounded, expounded upon the significance of the principles of audi alteram partem to the doctrine of natural justice. Justice P.N. Bhagwati while authoring the judgment beautifully expounded the said principles as follows:

“14. …..But at the same time it must be remembered that this is a rule of vital importance in the field of administrative law and it must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. It is a wholesome rule designed to secure the rule of law and the court should not be too ready to eschew it in its application to a given case. True it is that in questions of this kind a fanatical or doctrinaire approach should be avoided, but that does not mean that merely because the traditional methodology of a formalised hearing may have the effect of stultifying the exercise of the statutory power, the audi alteram partem should be wholly excluded. The court must make every effort to salvage this cardinal rule to the maximum extent permissible in a given case. It must not be forgotten that “natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances”. The audi alteram partem rule is not cast in a rigid mould and judicial decisions establish that it may suffer situational modifications. The core of it must, however, remain, namely, that the person affected must have a reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise. That is why Tucker, L.J., emphasised in Russel v. Duke of Norfolk [(1949) 1 All ER 109] that “whatever standard of natural justice is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case”. What opportunity may be regarded as reasonable would necessarily depend on the practical necessities of the situation. It may be a sophisticated full-fledged hearing or it may be a hearing which is very brief and minimal : it may be a hearing prior to the decision or it may even be a post-decisional remedial hearing. The audi alteram partem rule is sufficiently flexible to permit modifications and variations to suit the exigencies of myriad kinds of situations which may arise.”

5. Subsequently, the Supreme Court, in State of Kerala v. K.T. Shaduli Grocery Dealer Etc. reported in (1977) 2 SCC 777, while dealing with the provision under the Kerala General Sales Tax Act, 1963, examined the principle of natural justice as follows:

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