Ex parte Orders Based on Portal-Only Show Cause Notice Deemed Insufficient; Case Remitted for Re-evaluation
In a significant ruling, the Delhi High Court has ordered a fresh adjudication in the case of M/s Sai Overseas against the Union of India, highlighting procedural inadequacies in the service of a Show Cause Notice (SCN) under the Central Goods and Services Tax Act, 2017. The court found that the mere uploading of an SCN on the Common Portal without acknowledgment of receipt or a filed reply does not constitute sufficient service, necessitating the remittance of ex parte orders for re-evaluation.
The bench, comprising Justices Anil Kshetarpal and Harish Vaidyanathan Shankar, emphasized the need for procedural fairness in GST adjudication. They underscored that orders passed without ensuring the receipt of the SCN or a response from the assessee must be set aside, allowing the affected party to file a reply and receive a fair hearing.
The judgment, delivered on August 10, 2026, aligns with the principles established in the precedent case, Luxmi Traders v. Union Territory of Chandigarh, wherein similar procedural issues were identified. The court reiterated that in the absence of a response from the petitioner, M/s Sai Overseas, to the SCN uploaded on the portal, the proceedings should revert to the issuance stage, providing the petitioner a four-week period to file a reply.
Furthermore, the court directed that any adjudication involving allegations of fraud under Section 74 of the CGST Act must be considered during the fresh adjudication process. The petitioner is scheduled to appear before the designated Sales Tax Officer on August 20, 2026, for a reassessment of the case.
This ruling underscores the judiciary's commitment to ensuring that administrative processes within the GST framework adhere to principles of natural justice, offering taxpayers a fair opportunity to present their case.
Bottom line:-
Central Goods and Services Tax Act, 2017 - Show Cause Notice (SCN) uploaded on the Common Portal cannot be deemed to be sufficient service unless receipt is acknowledged or reply is filed - Ex parte orders passed solely on portal service are liable to be remitted for fresh adjudication, ensuring due opportunity of hearing to the assessee.
Statutory provision(s): Central Goods and Services Tax Act, 2017, Section 73, Section 74
M/s Sai Overseas v. Union of India, (Delhi)(DB) : Law Finder Doc id # 2960885
