Dimension to Service of Notices/ Orders Under GST By Zalak Sohil Dalal  

By Miss. Zalak Sohil Dalal – Advocate                         

Introduction

                  Service of a notice or an order is an extremely critical event in tax litigation and has been a matter of dispute over past many years. Introduction of Technology based GST and Implementation has just added another dimension to it.

                   Until now, taxpayers have, in many cases, argued non receipt of a notice or an order as a bonafide ground of delay in responding to the notice or filing of appeal. In a few cases, such arguments were made even to cover the lapse on part of the taxpayer in responding to the notice or filing the appeal within the stipulated timeline. The revenue authorities were generally not able to establish service of notice/ order and that too to the authorized person and hence, the said arguments were generally upheld.

Service of Notice under GST

Section 169 of CGST and SGST Act, 2017 Prescribes provision relating to Service of Notice in Certain Circumstances and in IGST Act it has been provided in Section 20 of IGST Act,2017.

Section 169 of CGST and SGST Act, 2017, provides for the modes of service that can be considered valid under the GST law. Subject of communication can be of any decision, order, summons, notice or other communication under the Act or the rules.

Section 169 of CGST and SGST Act, 2017, deals with service of order, notice etc and is similar to provisions in Central Excise Act, 1944 (Section 37C). However, in GST law, the concept of deemed service has also been brought in.

This Section details the mode of service that is considered valid.

Communication: Any decision, order, summons, notice or other communication under the Act or the rules.

Modes of Communication

 Modes of Communication: The above documents can be served on the Assessee in the following modes:

  Mode 1 – Physical Delivery

  Mode 2 – Regd. Post /speed post or Courier with acknowledgement due

  Mode 3 – Electronic Means

 Mode 4 – Media

 Mode 5 – Other Modes: If above modes fail, then it can be served by affixing it in some conspicuous place at       his last known place of business or residence.

  Date of service– Normal Cases: The above communications shall be treated as served on the date on which it is tendered or published or a copy thereof is affixed.

  Registered or Speed Post: If such communications are sent by registered/ speed post, it shall be treated as received by the addressee at the expiry of the normal period taken by such post in transit.

Details of Section 169 Service of Notice in Certain Circumstances

 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.

According to Section 169 of the CGST Act, 2017 Methods Service are as follows:

MODE-1:- PHYSICAL DELIVERY MODE

1. 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

MODE-2:- DISPATCH DELIVERY MODE

1. 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

MODE-3:- ELECTRONIC MODE

1. c) By sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or
2. d) By making it available on the common portal; or

MODE-4:- MEDIA MODE

1. 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

MODE-5:- DISPLAY [OTHER] MODE

1. 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.

2) Every decision, order, summons, notice or any communication shall be deemed to have been served on the date on which it is tendered or published or a copy thereof is affixed in the manner provided in sub-section (1).

3) When such decision, order, summons, notice or any communication is sent by registered post or speed post, it shall be deemed to have been received by the addressee at the expiry of the period normally taken by such post in transit unless the contrary is proved.

• If mode of post is used then post with acknowledgement due is essential to make it valid.
• What would be the date of serve in case of E-Mail when it is delivered on the next day of sending by the officer? Hope it would be considered on the date of receiving of E-Mail by the taxpayer.
• If 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, then it is valid under GST Act. Making available on the common portal is not mandatory, sending by E-Mail or other mode is sufficient to serve the notice.
• How the taxpayer comes to know that the E-mail is received from the authorized officer email id or not any phishing/fraud/spam e-mail in the current scenario of frauds done via E-Mail.

MODES OF SERVICE – DEMAND AND RECOVERY – DRC FORMS

         Although Section 169 ibid provides various modes of servicing, perusal of Rule142 of the CGST Rules, 2017 indicates the following forms should be uploaded electronically on the common portal irrespective of whether other modes of servicing were adopted or not:

1. Form GST DRC-01, which is a summary of notice;
2. Form GST DRC-07, which is a summary of order;
3. Form GST DRC-08, which is a summary of the rectification order or withdrawal order (viz., where an order uploaded on the system is withdrawn).

                         The aforesaid rule also stipulates Form GST DRC-02 be served electronically. The said Form is a summary of statement issued under Section 73(3) or 74(3). Though not explicit but from construction of the said rule, it appears Form GST DRC-02 should also be uploaded electronically on the common portal.

Interestingly, the said rule remains silent on the mode of serving the following forms:

1. Forms GST DRC-01A (Pre-Notice);
2. Form GST DRC-04 (Acknowledgement Accepting Payment Before Issue of Notice); and
3. Form GST DRC-05 (Order Concluding Proceedings pursuant to Intimation vide Form GST DRC-03)

DEEMED DATE OF SERVICE

(A) If served by registered post or speed post:

The document is deemed to have been received by the addressee at the expiry of the period normally taken by such post in transit.

However, such deeming fiction can be rebutted if the addressee can prove to the contrary. It is interesting to note that such deeming fiction does not explicitly cover service through courier with acknowledgement due.

(B) If served by other means:

The document is deemed to have been served on the date on which it is tendered or published or a copy is affixed in the manner listed above.

The date of service is critical since the limitation period for appeal commences therefrom. Hence, it is important for the taxpayer / addressee to monitor the section titled “View Notices / Orders” at the time of log in to the common portal.

CONSEQUENCES OF IMPROPER SERVICE OF NOTICE

If a notice, order, summons, etc. is not served properly on the addressee /taxpayer, it can be called in question. There are numerous instances where department proceedings were quashed by Courts on account of improper service.

However, such service cannot be called in question under the following circumstances:

• If the notice, order or communication is acted upon by the addressee; or
• If such service has not been called in question at or in earlier proceedings.

Hence, taxpayer / addressee should raise objections on validity of communication at inception.

• Evidently, these provisions shift the burden entirely on the taxpayer as now it would be his responsibility to establish beyond doubt that the service of notice or order was not as per the modes specified above. Given the level of awareness in the country, this is going to be an uphill task for the taxpayer. It would be, in my personal humble submission, responsibility of the tax consultant to ensure that the portal is regularly visited and such communications are appropriately responded to well within the stipulated time.
• Further, the Rule 142 of the CGST Rules provides the mode of service of summary of the notice or the amount payable along with a notice electronically in the form DRC-01, DRC-01A or DRC-02, as the case may be.
• It is interesting to note that while section 169 of the CGST Act provides various modes of service of a notice/order or any other communication, the rule 142 only talks about serving a summary of the notice or the amount payable electronically in the specified form. The other modes of service of notice/ order specified in the section 169 are completely absent in the rule 142. The rules are meant to implement the law. While the implementing machinery only specifies one mode of service of notice whereas the law provides for several others, can it be held that in the absence of machinery provisions, a notice served by a mode of service provided in the Act but not in rules would not be valid. Perhaps one would have to wait for a decision by an appropriate judicial forum for a better clarify in this regard.

             Let’s Go through Few Judicial Pronouncements in this Regard.

1. Akash Garg Vs State of M.P. (Madhya Pradesh High Court) W.P. No. 16117/2020

 Show Cause Notices (SCN) to Taxpayers Under GST Act Mandatory to Upload on Website– Mere E-Mail is not Suffice

                 Madhya Pradesh High Court in Akash Garg Vs State of M.P.  2020-VIL-567-MP struck down a Show Cause Notice/demand order on the ground that the same was not issued as per the procedure prescribed under Rule142(1) of the Central Goods and Service Tax Rules, 2017 i.e. uploading of the SCN/ order on the Goods and Service Tax Network (GSTN) portal.

                In this case the Revenue authorities issued a SCN and a demand order, which was communicated to the petitioner via e-mail and these were not uploaded on the GSTN portal as prescribed under Rule 142(1) of the CGST Rules. The petitioner filed a writ petition on the ground that the said order should be quashed since it was not compliant with the prescribed procedure and even violated the principles of natural justice. The petitioner contended that if the order would have been uploaded on the GSTN portal, it would have enabled it to avail alternative remedy before higher forum.

               While quashing the SCN/ demand order communicated by the Revenue authorities to the petitioner via email, the High Court made the following observations:

A bare perusal of Rule 142 of the CGST Rules, reveals that the only mode prescribed for communicating an SCN/order, was by way of uploading the same on the GSTN portal.

                When a specific procedure is prescribed to perform a specific act, all other procedures/ modes except the one prescribed are excluded. This principle becomes all the more stringent when it is statutorily prescribed.

• It is, therefore, essential for a tax payer to view the show cause notices, orders issued by the Authorities etc. in the GST portal.

2. Britannia Industries Limited v. Union of India a [Special Civil Application No. 14867 of 2022 dated August 07, 2023 Gujarat High Court

        Mere Failure to upload order copy on GSTN portal cannot prevent time-barred appeal

                  In a significant ruling, the Gujarat High Court in Britannia Industries Limited v. Union of India a [Special Civil Application No. 14867 of 2022 dated August 07, 2023] has clarified the parameters around the filing of appeals related to GST refunds. The Court emphasized that failure to upload an order copy on the GSTN portal cannot be the sole reason to prevent a time-barred appeal, especially when the order has been manually received by the Assessee. 

Issue:

Whether the Petitioner can file appeal manually if the order were not electronically uploaded, especially when it is undisputed fact that the Assessee was communicated the orders and had received the same manually?

      Court Observation and Decision:

• The Hon’ble Gujarat High Court in Special Civil Application No. 14867 of 2022 held as under: It is Observed, Section 107 of the CGST Act which states that any person aggrieved by any decision or order passed under the CGST Act may appeal to the Appellate Authority within three months from the date on which the said decision or order is communicated to the person.
• Noted that, the Appellate authority has power to condone the delay in filing appeal if the Petitioner shows sufficient cause which prevented them from filing an appeal within three months, then Appellate Authority can allow a further period of three months.
• Relied upon the Judgement of M/s. Meritas Hotels Pvt. Ltd. v. The State of Maharashtra [Writ Petition No.7793 of 2021 dated December 03, 2021] wherein Bombay High Court observed that, Rule 108 of the of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) is no doubt prescribes that the appeal has to be filed electronically, but it nowhere prescribes that the same is to be filed only after the order is uploaded on the GSTN Portal.
• Held that merely because the order was not uploaded on the GSTN portal will not save Assessee’s time to file appeals especially when the recovery proceedings have already been done and order to freeze bank accounts have been made in exercise of powers under Section 79 of the CGST Act.

3. New Grace Automech Products Pvt. Ltd. v. State Tax Officer [2023] 56 TAXLOK.COM 007 – MADRAS HIGH COURT

It was held that methods of service of order as specified in Section 169 are not conjunctive but provide alternate methods of service. In the instant case, the order was uploaded on the GST portal on the same day and therefore, Section 169 was complied with.

4. Pandidorai Sethupathi Raja v. Superintendent of Central Tax 2022 (12) TMI 1028 – MADRAS HIGH COURT

 where the order was uploaded on the common portal, it was held that making an order available on common portal would tantamount to ‘tendering’ of that order to recipient. There was no conscious intention on part of legislature to exclude ‘uploading’ as one of modes of service. Necessity for an alert by way of SMS/email that notice/order was uploaded on portal stood obviated as it was obligation of taxpayers to file returns monthly resulting in accessing portal at least once a month. Uploading of orders on common portal constitutes proper mode of service.

5. S. Jewellers v. State Tax Officer 2022 (1) TMI 49 – KERALA HIGH COURT

The order was sent by registered post and acknowledgement was received. It was held that such order was to be deemed to have been tendered to Assessee in view of provisions of sections 169(1)(b) and deeming fiction created under section 169(2) ibid. Assessee’s contention that said order was not received, could not be accepted. However, keeping in view that said order might have been misplaced by them and statutory right to pursue an appeal could not be curtailed solely on account of non-receipt or loss of such order, it was incumbent upon department to issue certified copy of order to them to pursue statutory right of appeal.

6. Ambika Stores, Represented By Its Proprietor Vasanth Manohar Singh V. The Deputy State Tax Officer-I, Gugai Circle, Salem – 7 [2023] 64 TAXLOK.COM 150 (Madras) 

Facts 

The petitioner applied for cancellation of registration on 22.01.2019 and the GST Registration of the petitioner was also cancelled on 06.02.2019. After the cancellation of GST registration, the petitioner was not required to verify the web portal any longer as the petitioner ceased to carry on the business. The respondent submitted that the petitioner was indeed carrying on business after the registration was cancelled on 06.02.2019 and therefore, notices were issued to the petitioner and the hard copy of the same notices were also sent to the petitioner by registered and they were returned with an endorsement “left”.

Issue

The specific case of the petitioner is that the petitioner has stopped his business of provision store namely M/s. Ambika stores and had applied for cancellation of registration and the GST Registration of the petitioner was also cancelled on 06.02.2019. Respondent submitted that based on the intelligence gathered, it was found that the petitioner was indeed carrying on business after the registration was cancelled on 06.02.2019 and therefore, notices were issued to the petitioner in Form GST ASMT-14 electronically on 30.04.2022. The petitioner is not without any remedy. The petitioner can file a statutory appeal before the Appellate Authority.

Court Observation and Decision

The court observed that the petitioner has deliberately attempted to evade the notice. The petitioner can file a statutory appeal before the Appellate Authority under Section 107.  The Hon’ble High Court granted liberty to the petitioner to file a statutory appeal before the Appellate Authority within a period of limitation prescribed.

Conclusion

                     Now, if a taxpayer defaults in responding to a notice or delays in filing of an appeal within the prescribed statutory timelines, the legal consequences would follow. If delay is beyond the maximum period allowed to be condoned under the GST law, the taxpayer would have no choice but to approach the jurisdictional high court. Given the approach of the judiciary towards non-compliant taxpayers, the relief may not be forthcoming.

                      It is, therefore, imperative for any GST Registered Tax Payer/Assessee to regularly visit the common portal maintained by the GSTN in order to retrieve any communication from the GST authorities and respond thereto within the stipulated timelines. Any lapse in appropriately responding to a notice/ order could result in unpleasant and avoidable complexities which could even result in bringing his business to a complete halt.

(Author is a well known Tax Advocate practicing at Surat)