2025 (5) TMI 239 - HC - GST

Violation 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. Even though the SCN has been issued post 16th January 2024 considering the fact that Petitioner did not get an opportunity to file the reply to the SCN the Court is inclined to provide the Petitioner the same therefore following the above decision the impugned order is set aside. 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.

Summary

The core legal questions considered by the Court include: (1) the validity and procedural propriety of the impugned Notifications Nos. 9/2023 and 56/2023 (Central and State Tax) issued under Section 168A of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017); (2) whether the extension of time limits for adjudication under Section 73 of the CGST Act was validly granted by these notifications; (3) the effect of the alleged non-compliance with the procedural requirements, including prior recommendation of the GST Council; (4) the legality of passing adjudication orders ex-parte due to non-receipt or non-visibility of show cause notices (SCNs) on the GST portal; and (5) the appropriate relief and procedural safeguards to be afforded to the petitioner in light of the above issues.

Regarding the validity of the impugned notifications, the Court noted that these were part of a batch of petitions challenging the notifications issued under Section 168A of the CGST Act, which empowers extension of time limits for adjudication of tax demands. The notifications in question purported to extend the limitation period for issuing show cause notices and passing orders under Section 73 for the financial year 2018-2019 and onwards.

The Court observed that the notifications were challenged on the ground that the proper procedure, specifically the prior recommendation of the GST Council as mandated under Section 168A, was not followed. The Court referred to the fact that Notification No. 9/2023 was issued after obtaining the GST Council's recommendation, whereas Notification No. 56/2023 (Central Tax) was issued prior to such recommendation, with ratification occurring only subsequently. This procedural irregularity was the basis of the challenge.

The Court also noted the divergent judicial opinions on the validity of these notifications from various High Courts: the Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court had expressed reservations regarding the validity of Notification No. 56/2023, a matter currently under consideration by the Supreme Court in S.L.P No. 4240/2025. The Supreme Court had issued notice and interim orders, acknowledging the cleavage of opinion among High Courts and the complexity of the issues.

In light of the pending Supreme Court proceedings, the Court refrained from expressing a definitive opinion on the validity of the impugned notifications. It observed that the interim orders passed by other High Courts, including Punjab and Haryana High Court, directed that matters be governed by the Supreme Court's forthcoming decision, emphasizing judicial discipline and consistency.

On the issue of the SCN dated 31st January 2024, the petitioner contended that it was uploaded under the 'Additional Notices Tab' on the GST portal, which was not adequately brought to their attention, resulting in non-receipt of the SCN and consequent denial of opportunity to file a reply or avail personal hearing. The petitioner argued that the impugned order was passed ex-parte without due process.

The Respondent-CGST Department countered that the SCN was issued after 16th January 2024, subsequent to which the portal was rectified to ensure visibility of notices. However, the Court found merit in the petitioner's submissions, relying on precedents where similar circumstances had led to remand of matters for fresh adjudication after affording the petitioner an opportunity to be heard.

The Court cited earlier decisions where orders passed without affording a fair opportunity to respond to SCNs uploaded under 'Additional Notices & Orders' tab were set aside. It emphasized the principle that adjudication orders should not be passed in default without ensuring the noticee's awareness and opportunity to present their case. The Court highlighted that the GST portal had been improved to place the 'Additional Notices & Orders' tab adjacent to the main 'Notices & Orders' tab to avoid such issues.

Applying these principles, the Court set aside the impugned demand orders dated 23rd April 2024 and 5th December 2023. It directed the petitioner to file replies to the SCNs dated 4th December 2023 and 23rd September 2023 within thirty days. The Court mandated that hearing notices should not only be uploaded on the portal but also sent via e-mail to the petitioner, ensuring effective communication and opportunity for personal hearing before the adjudicating authority.

The Court explicitly clarified that the question of the validity of the impugned notifications remained open and would be subject to the Supreme Court's final decision. However, it underscored the necessity of fair procedure in adjudication irrespective of the outcome on the notifications' validity.

In conclusion, the Court's significant holdings include the following:

"Be that as it may, intention is to ensure that the Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default."

"In view of the above, the present petition is allowed and the impugned order is set aside. The respondent is granted another opportunity to reply to the impugned SCN within a period of two weeks from date. The Adjudicating Authority shall consider the same and pass such order, as it deems fit, after affording the petitioner an opportunity to be heard."

"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."

"However, it is made clear that the issue in respect of the validity of the impugned notifications is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court."

The Court thus established the core principle that procedural fairness, including effective communication of notices and opportunity for personal hearing, is indispensable in tax adjudication proceedings, even when the validity of the underlying procedural extensions is under judicial scrutiny. The Court balanced the need for adherence to statutory and procedural mandates with the practical necessity of ensuring that taxpayers are not prejudiced by technical or administrative lapses.