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2025 (5) TMI 236 - HC - GSTViolation of principles of natural justice - Service of SCN - SCN was uploaded on Additional Notices Tab and did not come to the knowledge of the Petitioner - impugned order passed without providing the Petitioner a personal hearing and in the absence of a reply on behalf of the Petitioner - Challenge to adjudication order - challenge to N/N. 09/2023-Central Tax dated 31st March 2023 issued by the Central Board of Indirect Taxes and Customs - HELD THAT - This Court in Neelgiri Machinery through its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others 2025 (3) TMI 1308 - DELHI HIGH COURT under similar circumstances where the SCN was uploaded vide Additional Notices Tab had remanded the matter. It is relevant to note that post 16th January 2024 the Department has effected changes in the portal to ensure that the SCNs become visible to parties. However considering the SCN in the present case is of September 2023 following the above decision this Court inclined to set aside the impugned order and grant the Petitioner a fresh hearing. Let the entire matter be considered afresh and an order be passed on merits after duly considering the reply and the submissions made by the Petitioner in the personal hearing - Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Validity of the Impugned Notifications under Section 168A of the CGST Act Legal Framework and Precedents: Section 168A of the CGST Act empowers the Central Government to extend the time limit for adjudication of show cause notices and passing of orders, subject to the prior recommendation of the GST Council. The impugned notifications (Nos. 9 and 56 of 2023) purportedly extend such deadlines. Several High Courts have taken divergent views on the validity of these notifications. The Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 respectively, whereas the Guwahati High Court quashed Notification No. 56 (Central Tax). The Telangana High Court raised doubts regarding the validity of Notification No. 56 (Central Tax), and this issue is presently under consideration by the Supreme Court in SLP No. 4240/2025. The Supreme Court has issued notice and listed the matter for hearing, highlighting the cleavage of opinion amongst High Courts on the issue. The Punjab and Haryana High Court, acknowledging the pending Supreme Court proceedings, refrained from expressing any opinion and stayed to the Supreme Court's eventual decision. Court's Interpretation and Reasoning: This Court recognized the conflicting judicial opinions and the pendency of the Supreme Court's decision. Accordingly, it refrained from adjudicating the validity of the impugned notifications and held that the challenge to the notifications shall be subject to the outcome of the Supreme Court's ruling. Application of Law to Facts: The Court noted that since the Petitioner's challenge to the impugned notification is part of a batch of petitions pending before the Supreme Court, the present petition's challenge to the notification must await the Supreme Court's decision. Treatment of Competing Arguments: While the Petitioner challenged the notifications on procedural grounds, including the absence of prior recommendation by the GST Council in some instances, the Court deferred the issue to the Supreme Court, acknowledging the ongoing litigation and conflicting High Court rulings. Conclusion: The Court left the issue of the notifications' validity open and subject to the Supreme Court's final decision. Validity of Show Cause Notice and Adjudication Order - Procedural Fairness and Service of Notice Legal Framework and Precedents: Section 73 of the CGST Act governs the adjudication of demands relating to tax periods. Principles of natural justice require that a show cause notice be properly served and the party be given an opportunity of personal hearing before passing an order. Prior decisions of this Court, including W.P.(C) 13727/2024 (Neelgiri Machinery), have held that uploading SCNs under 'Additional Notices Tab' on the GST portal does not constitute effective service if the party is unaware of the notice. In such cases, remand for fresh adjudication after proper service and hearing was ordered. Court's Interpretation and Reasoning: The Petitioner contended that the SCN dated 27th September 2023 was uploaded on the 'Additional Notices Tab', which did not come to their notice. Consequently, the impugned order dated 24th December 2023 was passed ex-parte without personal hearing or reply from the Petitioner. The Court relied on its earlier decisions and similar judgments where orders passed without proper notice or hearing were set aside, and the matter remanded for fresh adjudication. It emphasized that the Department has since improved the portal to make SCNs more visible, but the present case concerns a notice issued prior to these changes. Key Evidence and Findings: The absence of personal hearing and failure to provide the Petitioner with an opportunity to reply were critical findings. The Court accepted that the SCN was not effectively communicated. Application of Law to Facts: The Court set aside the impugned demand orders and directed the Petitioner to file replies within 30 days. It mandated that future hearing notices be communicated not only by uploading on the portal but also via email and mobile communication to ensure effective service. Treatment of Competing Arguments: While the Department argued that the SCN was uploaded on the portal, the Court found this insufficient as a mode of service in the circumstances of this case, aligning with prior rulings emphasizing the right to be heard. Conclusion: The Court ordered fresh adjudication after proper service and hearing, setting aside the impugned orders. Interim Relief and Pending Supreme Court Adjudication The Court acknowledged the pendency of the Supreme Court's decision on the validity of the impugned notifications and directed that the present petition's challenge to the notifications be governed by the Supreme Court's outcome. It also noted that interim reliefs granted by other High Courts would continue to operate. Furthermore, the Court proposed categorizing pending petitions and granting appropriate reliefs, including permitting parties to pursue appellate remedies without prejudicing the question of the notifications' validity. 3. SIGNIFICANT HOLDINGS "Since the challenge to the above mentioned notifications is presently under consideration before the Supreme Court in S.L.P No 4240/2025, the challenge made by the Petitioner to the impugned notification in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court." "The impugned demand orders dated 23rd April, 2024 and 5th December, 2023 are accordingly set aside. In response to show cause notices dated 04th December, 2023 and 23rd September, 2023, the Petitioner shall file its replies within thirty days. The hearing notices shall now not be merely uploaded on the portal but shall also be e-mailed to the Petitioner and upon the hearing notice being received, the Petitioner would appear before the Department and make its submissions. The show cause notices shall be adjudicated in accordance with law." "The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly." Core principles established include:
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