GST: Promise vs. Reality

The Goods and Services Tax regime was introduced with the promise of simplicity, transparency, and certainty for businesses across India. For most business owners, compliance means timely filing of returns, payment of taxes, and maintaining basic records—nothing more, nothing less. Yet, in practice, many taxpayers find themselves confronted with sudden tax demands, frozen bank accounts, or recovery proceedings, often without ever having seen the notice or order that triggered such action. This situation frequently arises due to ambiguity surrounding the “date of communication” of notices and orders under GST.

At the heart of this issue lies a fundamental principle of our constitutional framework: no person should suffer civil consequences without being given a fair opportunity to be heard. The right to receive proper and effective communication of a tax notice or order is not a mere procedural formality—it is an essential component of natural justice and a safeguard against arbitrary State action. When orders are uploaded on the GST portal or sent electronically without ensuring that the taxpayer has actual knowledge, the statutory right to respond or appeal becomes illusory.

This blog examines how inconsistent methods of service under the GST law have placed honest businesses at risk of irreversible consequences, despite their full intent to comply. Drawing from judicial pronouncements and real-world experiences of taxpayers, this blog highlights how procedural ambiguity has fueled avoidable litigation, uncertainty, and hardship. More importantly, it makes a case for meaningful reform—one that prioritizes real communication over technical compliance, protects taxpayers’ constitutional rights, and restores trust in the GST system as a fair and predictable tax regime.

STATUTORY PROVISIONS

Section 169. Service of notice in certain circumstances

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 the family residing with the taxable person; or

b. By registered post or speed post or courier with acknowledgment 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.

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

3. When such a 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.

Deemed service is triggered upon tender, publication, or affixture and, in the case of postal service, upon the expiry of the normal transit period unless rebutted. Rule 142 CGST Rules requires electronic summary upload (FORM GST DRC-07) for specified orders, treating it as a recovery notice. Section 107(1) sets a three-month appeal limit from the communication date.

KEY COURT DECISIONS SHAPING GST COMMUNICATION

1. In M/s. Birla Brothers Private Limited & Anr. The Deputy Commissioner of Revenue, Park Street Charge & Anr. WPA 26252 of 2025 The Hon’ble Calcutta High Court set aside a GST adjudication order passed under Section 73 of the CGST/WBGST Act due to violation of principles of natural justice. The show-cause notice and order were uploaded only under the “Additional Notices and Orders” tab on the GST portal, which did not amount to proper service. No personal hearing was granted despite adverse consequences, thereby violating Section 75(4) of the Act. Relying on earlier coordinate bench decisions, the Court held that the petitioner was denied a fair opportunity to respond. The matter was remanded, granting the petitioner time to file a reply and directing fresh adjudication.

2. In Mohan Enterprises Vs. Deputy/ Assistant Commissioner of GST and Central Excise and Ors. MANU/TN/5131/ 2024, it was held by the Madras High Court that the show-cause notice and the impugned order were uploaded on the portal but were not communicated to the assessee through any other mode. The impugned order was to be set aside, and the matter remanded.

3. In Anant Wire Industries v. Sales Tax Officer, [2025] 170 taxmann.com 177 (Delhi), the Hon’ble Delhi High Court issued a show-cause notice, which was uploaded on the portal under ‘additional notices and orders’ tab, and service was not effected through any other means, i.e., registered email ID. The order passed based on such notice was to be set aside, and the matter was to be remanded.

4. In the case of Sreema Rice Mill vs. Union of India, [2024] 164 taxmann.com 487 (Calcutta) [02-07-2024], The Hon’ble Calcutta High Court held that the GST order is not invalidated simply because the show-cause notice and the order were not uploaded on the GST common portal, as long as alternative statutory methods of service, as provided under Section 169 of the Central Goods and Services Tax Act are followed.

WAY FORWARD FOR FAIR AND EFFECTIVE GST COMMUNICATION

Without delving into the debate on what constitutes valid or proper service of a notice or order under the GST law, this opinion seeks to address a larger and more pressing concern—namely, the absence of a clear, uniform, and taxpayer-centric mechanism for determining the date of communication of an order. Judicial pronouncements across jurisdictions demonstrate considerable divergence on this issue, resulting in uncertainty, avoidable litigation, and serious civil consequences for taxpayers.

In our considered view, Section 169 of the CGST Act, 2017, and Rule 142 of the CGST Rules, 2017 require structural reconsideration to eliminate ambiguity and conflicting interpretations. The cornerstone of any communication mechanism must be the taxpayer’s actual and effective knowledge of the notice or order, as it is the taxpayer who ultimately suffers adverse consequences, including denial of appellate remedies, coercive recovery, and attachment of bank accounts.

A statutory framework that renders the right to challenge an order illusory cannot be sustained in a system governed by principles of fairness and natural justice. Procedural provisions must therefore be designed to genuinely assist the affected person in exercising the right to object or appeal within the prescribed limitation period. The objective of tax administration should be to reduce litigation, not generate it, and to foster voluntary compliance rather than procedural entrapment.

At present, no statutory obligation is cast upon a taxpayer to periodically access the GST common portal to ascertain whether any notice or order has been issued. This expectation is particularly unrealistic for small and medium-sized businesses, many of which depend on part-time accountants, lack continuous digital access, or remain unfamiliar with portal-based compliance. The situation is further aggravated by systemic lapses such as unsigned orders, delayed uploads, emails without attachments, or communications landing in spam folders. In numerous cases, taxpayers become aware of adverse orders only upon initiation of recovery proceedings, by which time statutory appeal periods have already elapsed, leading to irreversible financial hardship.

In our opinion, the solution does not lie in compelling businesses to vigilantly monitor electronic platforms or engage in repeated litigation before constitutional courts. Instead, the law must adopt a clear, sequential, and mandatory mode of service, ensuring certainty and fairness. We recommend the following structured approach:

1. Primary service by physical tender of the notice or order upon the taxpayer or an authorised representative.

2. Secondary service by Registered Post Acknowledgment Due or a reputed courier service.

3. Tertiary service, where the above modes are impracticable, by affixture at the last known place of business and publication in a local newspaper.

Uploading notices or orders on the GST portal should serve as a supplementary measure for record-keeping, tracking of proceedings, and facilitation of recovery or appeal, rather than being treated as the determinative mode of communication for computing limitation under Section 107(1). Similarly, emails may be used only as an intimation of issuance, and not as the statutory trigger for appellate timelines.

Treating portal uploads or emails as the sole basis for commencement of limitation has led to a disproportionate waste of time, resources, and public money—both for taxpayers and the administration. Clear and unambiguous statutory provisions would obviate such disputes and allow authorities and courts alike to focus on substantive issues rather than procedural technicalities.

In conclusion, a simple, fair, and unambiguous communication mechanism would not only safeguard taxpayers’ rights but also strengthen the credibility of the GST regime. In the absence of such reform, unnecessary litigation on this issue is likely to persist for decades, undermining both ease of doing business and confidence in tax administration.

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