Tax Vista Your weekly tax recap Edn. 268 - 29th December 2025 Kasi Viswanathan V

 

 

A. Litigation:

Whether Exclusive Electronic Mode of Service Has Caught Taxpayers Off-Guard?

The batch of writ petitions challenged adjudication orders on the ground that notices and orders were uploaded on the GST common portal and information in respect of the same were sent to the registered e-mail ID and by SMS to the primary authorised signatory, but were not served through any physical / offline mode. According to the petitioners, such electronic uploading did not amount to effective "communication" of the orders. Petitioners claimed to have become aware of the proceedings only when recovery actions were initiated or when other consequential steps were taken by the department.

 

The grievance of petitioners is three-fold:

 

1. Violation of principles of natural justice by not serving notice or orders through physical/offline mode,

 

2. Hard limitation period to file appeal under section 107 and

 

3. Under GST, there is no power to recall ex-parte orders and no power vested in appellate authorities to remand matters to the adjudicating authority, unlike under the earlier indirect tax regimes.

 

The sum & substance of above is loss of hearing at first tier and rigid period of limitation in challenging such orders in the appellate stage.

 

The Court directed the State Government and GSTN to file affidavits setting out their respective positions. The State Government informed the Court that, except in cases involving cancellation of registration, services of orders and notices are affected through electronic mode only [c. Sending communication to registered e-mail address and d. making available on the common portal]. GSTN submitted that an electronic trail showing the date on which a notice, order or additional notice was opened or accessed by the taxpayer was not available. The Central Government informed the Court that, in addition to electronic service, it had also continued the practice of serving notices and orders through physical mode, which explained why comparatively fewer writ petitions involved adjudication by Central authorities.

 

The Court critically acknowledged that its earlier decision in Riya Construction [2025-VIL-1144-ALH], which had been followed in more than 2300 cases, reflected only rough and ready or minimum justice delivered, owing to extreme circumstances, existence of widespread grievances and need to serve the larger cause of justice. The Court explained that this approach in Riya Construction was influenced by following reasons

 

1. Under the pre-GST regime, notices and orders were served only through physical modes, and the sudden shift to an exclusively electronic mode under GST may have left small and medium taxpayers insufficiently conversant with the new system, particularly when the portal operates only in English while the communications in the present cases are in Hindi.

 

2. Further, the remedies available under earlier regimes such as recall of ex-parte orders and the power of remand with appellate authorities have not been continued under GST.

 

3. Additionally, the power of appellate authorities to condone delay has been curtailed and restricted to a maximum of one month.

 

However, the Court clarified that the above difficulties arising from doing away of pre-existing norms in GST do not influence the decision in present batch of writ petitions, which had to be decided strictly on the basis of statutory provisions. It was also observed that divergence in practice between the Centre and the State also does not influence the outcome, as the issue had to be decided purely on the interpretation of law.

 

On merits, the Court held that the modes of service prescribed under Section 169(1) are alternative to each other and there is no particular sequence, except for clause (f). The deeming fiction under sub-sections (2) and (3) of Section 169 was held to apply only to clauses (a), (b) (excluding courier), (e) and (f) of Section 169(1), and not to clauses (c) and (d). Consequently, where constructive service could not be invoked, actual service had to be examined. Based on the affidavits and submissions, the Court inferred that the date and time of service of notices or orders uploaded on the common portal or sent by e-mail were not known either to the revenue authorities or to GSTN.

 

The Court emphasised that Section 107 uses the expression "communicated", in contrast to the words "served" or "received". It relied upon on the Supreme Court decision in CCE v. M.M. Rubber and Co. [1991-VIL-11-SC-CE], wherein it was held that while one principle of limitation concerns the authority exercises a power or do an act affecting the rights of parties within the prescribed period, the second principle relates to computation of limitation for the aggrieved party seeking a remedy. For the latter, knowledge of the affected party, either actual or constructive, is an essential element, which must be satisfied.

 

The Court further observed that although the concept of "receipt" is contained in the Information Technology Act, for the purpose of limitation under Section 107 to file appeal more than 'receipt', actual or constructive "communication" is decisive. With respect to service through registered e-mail under clause (c), the Court observed that such intimation does not communicate the notice or order, or its contents but only conveys information about the existence of the notice or order.

 

The Court after holding that provisions of IT Act can be invoked, examined Section 13 and observed that when the time of retrieval of an electronic record from a computer resource as required under section 13(2)(a)(ii) is not available, the time of receipt becomes indeterminate. A similar position was held to apply to e-mail communication. In any event, the Court held that Section 13 deals only with "receipt", which falls short of the "communication" required under Section 107 of the GST Act. The deeming fiction created under Section 169(2) and (3) of GST Act, read with Sections 12 and 13 of the IT Act, could not be enlarged to benefit the revenue. Equating uploading of a document on the common portal with tendering, dispatch by speed post, publication or affixation was described as an over-simplistic approach. The Court thus effectively concluded that notices and orders are communicated only when they come to the knowledge of the taxpayers. Having reached this conclusion, the Court stated that it could have relegated the petitioners to the appeal remedy, however, to maintain consistency with Riya Construction (supra), it directed remand of the matters to the adjudicating authority, subject to payment of 10% of the tax demand.

 

The Court maintained a clear divide between the executive and the judiciary and consciously refrained from issuing directions on matters falling within the executive domain, despite its strong observations. It further noted that disputes regarding non-receipt of e-mails would require forensic investigation involving significant time and cost and were, therefore, impractical to pursue. Since e-mails conveyed only information about the order and not the order itself, such intimation could never amount to "communication" for the purpose of Section 107. The date declared by the taxpayer as the date of communication was to be accepted and burden is on department to disprove the same.

 

While the Court's detailed analysis is founded on the expression "communicated" contained in Section 107, the reasoning that the taxpayers were not aware of the orders would equally apply to the notices that culminated in such orders. Even though the term "communication" is not expressly used in the provisions governing issuance of notices, the principle of knowledge remains intrinsic to the validity of the proceedings. It therefore naturally follows that the proceedings ought to recommence from the stage of notice. In that event, the matters could have been remitted to the adjudicating authority on that basis alone, without observing that the remand to adjudicating authority was merely ordered to maintain consistency with Riya Construction. Especially when the Court itself clarified that present decision is based on interpretation of statutory provisions and not based on difficulties arising from doing away of pre-existing norms, which formed the unstated basis for the decision in Riya Construction.

 

The Court's findings on whether the common portal constitutes a "designated computer resource" are not entirely clear. While reference is made to Section 13(2)(a)(ii) of the IT Act, Section 13(2)(b) is not discussed at all. If the common portal is treated as a designated computer resource, Section 13(2)(a)(i) would apply when notices or orders are made available on the portal. Similarly, if the registered e-mail ID is regarded as a designated computer resource, Section 13(2)(a)(i) would apply when notices or orders are transmitted through e-mail. Section 13(2)(a)(ii) will come into picture in cases where there is a designated computer resource, but the notice or order is delivered to a computer resource other than the designated one. In the present case, as per the recorded facts, notices and orders were shared through both the common portal and e-mail, rendering reference to Section 13(2)(a)(ii) unnecessary. Conversely, if neither the portal nor the e-mail ID is treated as a designated computer resource, Section 13(2)(b) would be attracted, an aspect which remains unexamined. In any case, the Court held that Section 13 of the IT Act governs only "receipt" and falls short of "communication" required under section 107 of GST Act.

 

In contrast, the Madras High Court in Axiom Gen Nxt India Pvt. Ltd [2025-VIL-396-MAD] held that during the period of active registration, the common portal is a designated computer resource and Section 13(2)(a)(i) applies. Where no designated computer resource exists, Section 13(2)(b) would apply. In both situations, receipt occurs when the electronic record enters the common portal, which is the computer resource of the registered person. While holding that uploading on the portal constitutes sufficient service under Section 169(1), the Madras High Court also observed that such service may not be effective, and where a mode adopted proves ineffective, the department ought to explore other modes of service. The matter was therefore remanded. Although this decision was cited by the revenue, it appears that it was not examined further in the present case, possibly because the revenue quoted that the Madras High Court decision treated uploading on the common portal as equivalent to publication. Nonetheless, both Courts ultimately granted similar relief by remanding matters to the adjudicating authority.

 

Finally, while Section 169(2) deems service and Section 169(3) deems receipt, the present decision clearly distinguishes between "served", "received" and "communicated". What remains unresolved is the interval between actual or deemed service or receipt and effective communication, not only for electronic modes of service but also for physical modes of service.

 

The Court's objective of ensuring that notices and orders are effectively communicated to taxpayers will be met, if the suggestions made by Petitioner in the case of Sharp Tanks & Structural Private Limited [2025-VIL-981-MAD] such as prominent notification windows and mandatory OTP-based acknowledgements are implemented, thereby ensuring that electronic service truly results in effective communication [2025-VIL-1353-ALH].

 

(The views expressed are personal. The author can be reached for feedback or queries on v.k.vishwa@gmail.com)