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2025 (5) TMI 254 - HC - GSTViolation of principles of natural justice - submission of the Petitioner is that the SCN was not brought to the knowledge of petitioner - Challenge to adjudication order and N/Ns. 9/2023-Central Tax dated 31st March 2023 and 56/2023- Central Tax dated 28th December 2023 issued by the Central Board of Indirect Taxes and Customs - HELD THAT - The Court has heard the parties. In fact this Court in NEELGIRI MACHINERY THROUGH ITS PROPRIETOR MR. ANIL KUMAR VERSUS 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 subject to terms imposed. It is relevant to note that post 17th January 2024 the Department has effected changes in the portal to ensure that the SCNs become visible to parties. However the SCN in the present case is of December 2023 therefore following the above decision in Neelgiri Machinery this Court inclined to set aside the impugned order and grant the Petitioner a fresh hearing. The matter is relegated back to the adjudicating authority and the Petitioner is permitted to file a reply within 30 days - petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS a) Validity of the Impugned Notifications under Section 168A of the CGST Act Relevant legal framework and precedents: Section 168A of the CGST Act empowers the Central Government to extend the time limits for adjudication of SCNs and passing of orders beyond the statutory period, subject to the prior recommendation of the GST Council. The notifications under challenge purportedly extend these time limits for the tax period April 2018 to March 2019 and subsequent periods. Several High Courts have delivered conflicting judgments on the validity of these notifications. The Allahabad High Court upheld Notification No. 9/2023, while the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Patna High Court upheld Notification No. 56/2023. The Telangana High Court expressed reservations about the validity of Notification No. 56/2023 but did not conclusively rule on its vires. This conflicting judicial landscape has necessitated intervention by the Supreme Court. The Supreme Court, in SLP No. 4240/2025, has issued notice and is considering whether the time limits for adjudication under Section 73 of the CGST Act and the corresponding State GST Act could be extended by the impugned notifications. The Supreme Court recognized the cleavage of opinion among High Courts and has stayed the matter for final adjudication. Court's interpretation and reasoning: The Delhi High Court acknowledges the ongoing Supreme Court proceedings and the divergent High Court rulings. It refrains from expressing any opinion on the validity of the impugned notifications, deferring to the Supreme Court's ultimate decision. The Court also notes that the challenge to the notifications is part of a batch of petitions, with the lead matter being heard extensively. Application of law to facts: Given the pendency of the Supreme Court's decision and the conflicting views, the Delhi High Court holds that the challenge to the impugned notifications must be subject to the outcome of the Supreme Court proceedings. The Court directs that the adjudication orders passed pursuant to these notifications be considered in light of the Supreme Court's final ruling. Treatment of competing arguments: The Court records the submissions of the parties challenging the notifications on procedural grounds, including non-compliance with Section 168A's requirement of prior GST Council recommendation. The Court also notes the Government's reliance on the notifications to extend limitation periods. However, the Court does not resolve these disputes at this stage, leaving them open for the Supreme Court's determination. Conclusions: The validity of the impugned notifications remains an open question pending the Supreme Court's decision. The Delhi High Court defers to the higher forum and refrains from adjudicating on this issue. b) Validity of the Show Cause Notice and Adjudication Order - Procedural Fairness and Opportunity to be Heard Relevant legal framework and precedents: Principles of natural justice and procedural fairness require that a party be given adequate notice of proceedings, an opportunity to file replies, and a personal hearing before adverse orders are passed. The CGST Act and allied procedural rules mandate issuance of SCNs and personal hearings before passing orders under Section 73. Recent decisions of the Delhi High Court have addressed issues arising from the GST portal's practice of uploading notices under an 'Additional Notices & Orders' tab, which was not prominently visible to taxpayers, resulting in non-receipt of SCNs and consequent ex-parte orders. The Court in W.P.(C) 13727/2024 (Neelgiri Machinery) and other similar cases held that such procedural irregularities vitiate the adjudication process and remanded the matters for fresh adjudication after providing an opportunity to be heard. Court's interpretation and reasoning: The Court finds that the SCN dated 6th December 2023 was uploaded under the 'Additional Notices Tab', and as a result, the Petitioner did not come to know of the notice. Consequently, the impugned order dated 18th April 2024 was passed without affording the Petitioner a personal hearing or an opportunity to file a reply. This violates the principles of natural justice. The Court relies on its own precedent and similar decisions to hold that orders passed in default due to non-receipt or non-awareness of SCNs must be set aside and the matter remanded for fresh adjudication. Key evidence and findings: The Court notes that post 17th January 2024, the Department has made changes to the GST portal to ensure SCNs are more visible and accessible to taxpayers. However, the SCN in the present case predates these changes. The Petitioner's inability to access the notice and the absence of personal hearing are critical findings. Application of law to facts: Applying the principles of natural justice and the precedents, the Court sets aside the impugned demand orders dated 23rd April 2024 and 5th December 2023. It directs the Petitioner to file replies within thirty days and mandates that hearing notices shall not merely be uploaded but also communicated by email and phone to ensure actual notice. Treatment of competing arguments: While the Department may argue that the notices were uploaded on the portal, the Court emphasizes that mere uploading under a less visible tab does not satisfy the requirement of effective notice. The Court prioritizes ensuring fairness over procedural technicalities that result in prejudice to the Petitioner. Conclusions: The adjudication order is quashed, and the matter is remanded for fresh consideration after affording the Petitioner a genuine opportunity to be heard. The Court prescribes procedural safeguards for communication of notices going forward. c) Effect of Pending Supreme Court Proceedings on the Present Petition Relevant legal framework and precedents: When a matter involving identical or similar questions of law is pending before the Supreme Court, lower courts generally refrain from expressing final views to maintain judicial discipline and avoid conflicting judgments. Court's interpretation and reasoning: The Court notes that the Punjab and Haryana High Court has disposed of connected petitions with interim orders, deferring to the Supreme Court's forthcoming judgment. The Delhi High Court follows suit, acknowledging that the issue of the validity of Section 168A and the impugned notifications is sub judice before the Supreme Court. Application of law to facts: The Court holds that the present petition challenging the notifications shall be subject to the Supreme Court's decision in SLP No. 4240/2025. The Court refrains from adjudicating on the vires of the notifications and confines itself to procedural issues and interim reliefs. Conclusions: The Court's order is expressly made subject to the Supreme Court's ultimate determination on the validity of the impugned notifications. 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." "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." Core principles established include:
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