Madras High Court Sets Aside GST Order for Fair Hearing

Case Background

The Madras High Court recently set aside a GST assessment order after finding that the tax department had not followed proper procedures in serving a Show Cause Notice (SCN).

The taxpayer in this case had opted to cancel their GST registration in 2022. Even after the cancellation, the department issued SCNs relating to past transactions. However, instead of sending them through officially recognised channels, the notices were only uploaded on the GST portal under the “View Additional Notices and Orders” section.

No attempt was made to send these notices by registered post, email, or any other method specified under Section 169 of the CGST Act. Because of this, the taxpayer never got the opportunity to defend themselves before the assessment was completed.

Court’s Key Findings

Uploading on Portal Is Not Enough

While placing a notice on the GST portal is a valid method, it is not the sole method. If there’s no reply from the taxpayer, the department must also use other approved means such as email or postal delivery.

Breach of Fair Hearing Principles

Issuing an order without giving the taxpayer a real chance to respond is a breach of natural justice, making the order legally flawed.

Communication After Cancellation

When GST registration is voluntarily cancelled, any official communication should be sent to the last provided contact details, including email, to ensure the taxpayer is informed.

Court’s Decision & Directions

The assessment order dated 12 April 2024 was annulled, and the matter sent back to the tax department with instructions:

The taxpayer must deposit 10% of the disputed tax amount within four weeks.

A fresh written response must be submitted within three weeks after payment.

The department must provide at least 14 days’ advance notice for a personal hearing before making any fresh decision.

Lessons for Taxpayers and the Department

For Taxpayers:

Keep an eye on the GST portal, even after cancelling registration.

Ensure contact information, especially email, is always up to date.

Raise concerns if notices are not served through recognised channels.

For the GST Department & Advisors:

Follow all modes of service outlined in Section 169 to avoid disputes.

Avoid ex-parte orders unless it is clear the taxpayer has been properly notified.

Proper communication saves time, reduces disputes, and strengthens the department’s case.

Final Thoughts

This case highlights that procedural compliance is just as important as substantive tax law. The department’s failure to serve notices through the correct channels cost them time and effort, while the taxpayer was given another chance to present their case.

For both sides, this is a reminder that clear, documented communication is the foundation of fair tax proceedings.