The Patna High Court has set aside an ex parte GST assessment order and the consequential demand in Form GST DRC-07 after finding that the department failed to establish that the show cause notice had actually been served on the taxpayer. 

The bench of  Justice Rajeev Ranjan Prasad and Justice Sunil Dutta Mishra has observed that mere dispatch of a notice through speed post is not sufficient proof of service, particularly where the taxpayer specifically denies receiving it. 

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The case arose from a writ petition filed before the Patna High Court challenging an ex parte assessment order dated 11 December 2023 and the consequential demand raised through DRC-07. The petitioner also sought an opportunity to present its case and requested a fresh hearing before finalisation of the assessment. 

The central issue before the Court was whether the show cause notice dated 20 March 2023 had been duly served upon the petitioner.

The petitioner maintained that the show cause notice had never been received. The GST Department, on the other hand, submitted that the notice had been uploaded on the GST portal on 20 March 2023 and had also been sent through speed post. To support its contention, the Department relied upon photocopies of pages from its dispatch register. 

The petitioner reiterated in its rejoinder that neither the electronic notice nor the speed-post communication had actually been received.

Another issue raised by the petitioner concerned the Document Identification Number (DIN) mentioned on the show cause notice. According to the petitioner, the DIN appeared to have been manually written on the notice, contrary to CBIC Circular No. 128/47/2019-GST dated 23 December 2019, which mandates electronic generation of DIN for communications issued to taxpayers, including emails. 

During the hearing, the Department argued that if the speed-post article had not been returned undelivered, a presumption of service could arise.

However, the Department also admitted that the DRC-07 was uploaded only after expiry of the statutory period available to the taxpayer for filing an appeal under Section 107(4) of the CGST Act. The Department suggested that this difficulty could be addressed by directing the appellate authority not to reject an appeal on limitation grounds if the taxpayer challenged the assessment order. 

The Court noted that the assessment was an ex parte order and that the petitioner had specifically asserted, including through an affidavit, that the show cause notice and speed-post communication had not been received.

Although the Department produced a photocopy of the dispatch register to establish that the notice had been dispatched, the Court held that mere dispatch cannot substitute proof of actual service. 

The Court further observed that the Department had not established the address to which the notice was dispatched or identified who had received it. Significantly, the Department had also failed to produce the speed-post tracking report, which could have provided evidence regarding delivery of the communication. 

On these facts, the Patna High Court concluded that the petitioner had established a case of violation of the principles of natural justice.

The Court held that since service of the show cause notice had not been proved, the petitioner had not been given a meaningful opportunity to respond before the ex parte assessment was made. Consequently, the Court set aside the impugned assessment order. 

Instead of bringing the proceedings to an end, the High Court restored the opportunity for the petitioner to participate in the adjudication process.

The petitioner has been granted 30 days from 18 September 2026 to file its response to the show cause notice. Thereafter, the competent authority has been directed to fix a date for hearing and communicate the same to the petitioner. 

The Court further directed the competent authority to take a final view and pass an appropriate order within two months from the date of filing of the show cause notice response.

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