Demand order not uploaded on common portal is valid or invalid

For initiating the recovery proceedings against the taxable person there is a proper mechanism for serving show cause notices and orders. The same is contained in section 73, 74 and 74A of CGST Act 2017. Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where the ITC has been wrongly availed or utilised, then he shall serve a show cause notice (SCN) to the person chargeable with tax. Section 73 of CGST Act 2017 contains the recovery proceedings for the reason other than fraud and section 74 of CGST Act 2017 states that if there is an intention of fraud then proceedings shall be initiated under this section. However, vide section 138 of Finance (No. 2) Act 2024 read with Notification No. 17/2024-Central Tax dt. 27.09.2024, a new section 74A has been inserted for initiating recovery proceedings pertaining to the financial year 2024-25 onwards. In this article we will discuss about the validity those show cause notices & demand orders which are not uploaded on common portal.

Although in section 73, 74 & 74A the provisions relating to issuance of show cause notices & orders are contained. However, in those section there is no where mentioned about the valid mode of serving show cause notices and order. In this respect the attention is invited to sub section 1 of section 169 of CGST Act 2017 which contains the provisions relating to service of notice in certain circumstances. The said section is laid down as follows;

“(1) 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, namely:

(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

(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

(c) by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or

(d) by making it available on the common portal; or

(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

(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”.

Thus as per section 169(1) there are various modes of servicing notice or order like by courier or by registered post or speed post or by sending a communication to the e-mail address or by making it available on the common portal.

In case of M/s Sreema Rice Mill Versus Union of India [2024(07)LCX0248] the Calcutta High Court allowed the petitioner to appeal an adjudication order despite procedural lapses in document uploads, directing the respondents to ensure proper documentation and appeal access. The case is summarised as follows;

The petitioner challenged an adjudication order dated 29.12.2023, arguing that the related show cause notice and adjudication order were not uploaded on the common portal, preventing them from appealing. The respondents admitted the non-uploading was due to technical issues but stated that the petitioner had been served via speed post and had responded to the notice. Having regard to the aforesaid, it is submitted that in the light of the order dated 29.12.2023 the Form DRC-07 being uploaded, there cannot be any difficulty on the part of the petitioner to prefer an appeal.

The court noted that although non-uploading was a procedural lapse, the petitioner had received the notice and responded. The court contends that one of the modes for service of notice is to make the same available on common portal while one of the other modes for service is by registered/speed post also. Admittedly, since, the petitioner had been served with the show-cause notice by speed post and the petitioner having responded to the same, constitutes substantial compliance of statutory provision as regards service of notice. The court directed the respondents to upload the order if not already done and allowed the petitioner to file an appeal within three months from either the judgment date or the upload date. The matter's merits were not addressed, and no costs were awarded.

Further, in the case of M/s Gujarat State Petronet limited v/s Union of India [2020(03)LCX0158] the Gujarat High Court held that it is apparent that the appeal is required to be filed in electronic mode only and if any other mode is to be prescribed then the same is required to be notified by way of a notification. There is nothing on record to show that any notification has been issued for manual filing of an appeal. In such circumstances, though the physical copy of the adjudication order was handed over to the petitioner, the time period to file appeal would start only when the order is uploaded on the GST portal. Without the order being uploaded, the petitioner could not file the appeal and therefore, the contention raised on behalf of the respondents that the uploading of the order and filing of the appeal are two different processes, is not tenable in law. Moreover, filing of the appeal and uploading of the order are intertwined activities. The order is required to be uploaded online so that the appeal can be filed electronically as per the mandate of the provisions of the Act and the Rules. However, there is no provision or procedure to file the appeal manually. In such circumstances, there was no failure on part of the petitioner to file the appeal within the prescribed period of limitation as the period of limitation did not start till the order passed by the adjudicating authority was uploaded on the GST portal. Merely because the petitioner has filed the appeal manually after exhausting all the efforts to ensure filing of the appeal in proper and legal manner, the impugned order rejecting such appeal on the ground of limitation is not sustainable as the petitioner cannot be penalised for lack of clarity of the provision when the new law is enacted.

From the facts on record, it also emerges that the petitioner has taken all the steps for proper filing of the appeal immediately after issuance of the order passed by the adjudicating authority till the filing of the appeal. Therefore, the appellate authority was not justified in rejecting the appeal on the ground of limitation and thereby depriving the petitioner to submit its case on merits.

In view of above, taking into consideration the peculiar facts of the case, the impugned order passed by the appellate authority is required to be quashed and set aside by condoning the delay in filing of the appeal manually by the petitioner in absence of availability of the order passed by the adjudicating authority on the GST portal.

Conclusion: The demand order not uploaded on the common portal but served via speed post can’t be said to be invalid. However, for filing an appeal against such order the time period of 3 months would be counted from the date of uploading such order.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.