The Petitioner received a demand notice for payment of INR 10,85,557, including penalties. The decision was made by the Proper Office in accordance with Section 73 of the Central Goods and Services Tax Act, 2017 (commonly referred to as the CGST Act).

The Ld. Counsel for the petitioner argued that after closing the business in 2020, the petitioner did not check the portal. The Show Cause Notice (SCN) was only posted on the portal and not communicated to the petitioner through other methods, leaving the petitioner unaware of any initiated proceedings. As a result, the petitioner was unable to provide a response to the SCN.

The argued order acknowledged that a demand was imposed ex-parte due to the taxpayer’s failure to respond or attend a “Personal Hearing”. Despite being given additional opportunities and reminders, the taxpayer did not provide a defense, leading to the ex-parte decision in accordance with the CGST/DGST Act and rules. The Proper Officer noted that the taxpayer did not submit a response online or appear in person or through a representative.

The Hon’ble High Court held that the petitioner was unable to access the portal due to business closure, leading to their inability to respond to the Show Cause Notice. The impugned order was passed solely based on this failure. The petitioner should be given a chance to respond, and the matter should be sent back to the Proper Officer for re-adjudication. As a result, the order dated 21.12.2023 was revoked, and the Show Cause Notice was reinstated on the record of the Adjudicating Authority.

Accordingly, the High Court instructed the Petitioner to file another reply to the Show Cause Notice within two weeks. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75 (3) of the Act.

M/S. SWASTIK ENTERPRISES v. UNION OF INDIA [W.P.(C) 5938/2024 & CM APPL. 24687/2024]

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