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2025 (5) TMI 377 - HC - GSTChallenge to SCN and N/N. 9/2023-Central Tax dated 31st March 2023 issued by the Central Board of Indirect Taxes - extension of time limits for adjudication of show cause notices and passing of orders under Section 73 of the CGST Act - HELD THAT - A perusal of the record reveals that a reply to the SCN was filed by the Petitioner on 08th October 2023. However no supporting documents were filed. Subsequently the order dated 31st December 2023 has been passed which also appears to be quite sketchy. Considering the circumstances that no documents were filed by the Petitioner along with the reply to the SCN and keeping in mind the order dated 28th December 2023 passed by this Court this Court is of the opinion that the Petitioner shall be given an opportunity to file a fresh reply along with any relevant documents within a period of 30 days. The reply filed by the Petitioner to the SCNs along with the submissions made by the Petitioner during the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh orders with respect to the SCNs shall be passed accordingly - Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Validity of Notifications Nos. 9 and 56 of 2023 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 prescribed for adjudication of show cause notices and passing of orders. The statute mandates that such extensions require prior recommendation of the GST Council. The impugned notifications were issued purportedly under this provision. Several High Courts have adjudicated on the validity of these notifications with divergent outcomes. The Allahabad High Court upheld Notification No. 9, while the Patna High Court upheld Notification No. 56. Conversely, the Guwahati High Court quashed Notification No. 56. The Telangana High Court also expressed reservations about the validity of Notification No. 56 but did not conclusively decide the issue. The Supreme Court has granted notice in S.L.P No. 4240/2025 to resolve these conflicting views, specifically addressing whether the time limits for adjudication under Section 73 of the CGST Act and corresponding State GST Acts for FY 2019-20 could be extended by the impugned notifications. Court's interpretation and reasoning: The Court recognized the ongoing judicial divergence and the pendency of the Supreme Court's decision as determinative. It refrained from expressing any opinion on the vires of the notifications, deferring to the Supreme Court's eventual ruling. The Court noted the procedural irregularities alleged in issuance of Notification No. 56, particularly that ratification was given post issuance, contrary to the statutory requirement. Application of law to facts: The Court observed that since the validity of the notifications is sub judice before the Supreme Court, the challenge to the impugned notification in the present petition would be subject to the Supreme Court's outcome. Treatment of competing arguments: The Court acknowledged the conflicting High Court rulings and the submissions of counsel regarding procedural lapses in issuance of the notifications. It also took note of the interim orders passed by other High Courts and the Supreme Court's intervention. Conclusion: The Court held that the question of validity of the impugned notifications is pending before the Supreme Court and the present petition's challenge to the notifications shall await the Supreme Court's decision. Extension of time limits for adjudication under Section 73 of the CGST Act Relevant legal framework: Section 73 prescribes the time limits for issuance of show cause notices and passing of adjudication orders for recovery of tax not paid or short paid. Section 168A permits extension of these time limits by notification, subject to GST Council recommendation. Court's interpretation and reasoning: The Court noted that the impugned notifications purportedly extended the limitation period for adjudication of show cause notices issued for FY 2019-20. However, challenges have been raised on the ground that the extensions were granted without adhering to the mandated procedure under Section 168A. Key evidence and findings: The Court observed that the Petitioner had filed a reply to the show cause notice but had not submitted supporting documents. The adjudication order passed was found to be sketchy and ex-parte in nature, raising concerns about procedural fairness. Application of law to facts: The Court directed that the Petitioner be afforded an opportunity to file a fresh detailed reply along with relevant documents within 30 days. It further directed issuance of a notice for personal hearing to ensure the Petitioner's right to be heard before passing fresh orders on the show cause notice. Treatment of competing arguments: While the Petitioner argued for relief on account of inability to file replies and avail personal hearings, the Department contended that the adjudication had proceeded as per law. The Court balanced these by emphasizing the need for procedural fairness irrespective of the validity of the notifications. Conclusion: The Court set aside the earlier adjudication order and ordered fresh proceedings with due opportunity to the Petitioner to be heard and present evidence. Effect of conflicting judicial pronouncements and pending Supreme Court decision Relevant legal framework: The principle of judicial discipline and binding effect of Supreme Court decisions on subordinate courts. Court's interpretation and reasoning: The Court noted that multiple High Courts have taken differing views on the validity of the impugned notifications. The Punjab and Haryana High Court had disposed of similar petitions, deferring to the Supreme Court's pending decision and directing interim orders to continue. Application of law to facts: The Court held that in view of the pendency of the Supreme Court's decision, it would not express any opinion on the notifications' validity and would govern the present petitions in accordance with the Supreme Court's ruling. Conclusion: The Court disposed of the petitions subject to the Supreme Court's final adjudication and interim orders as applicable. Procedural fairness in adjudication proceedings Relevant legal framework: Principles of natural justice require that a party against whom adverse orders are passed must be given a reasonable opportunity to present its case, including filing replies and personal hearings. Court's interpretation and reasoning: The Court found that the Petitioner had filed a reply without supporting documents and was not afforded adequate opportunity for personal hearing. The adjudication order was passed ex-parte and was sketchy. Application of law to facts: To remedy this, the Court directed that the Petitioner be allowed to file a fresh detailed reply with documents and be granted a personal hearing before the Adjudicating Authority. The Adjudicating Authority was directed to consider the submissions and pass fresh orders accordingly. Conclusion: The Court emphasized the necessity of procedural fairness and set aside the earlier order to allow fresh adjudication with due process. 3. SIGNIFICANT HOLDINGS "Since the challenge to the above mentioned notifications is presently under consideration by the Supreme Court in S.L.P No 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors., the challenge made by the Petitioner to the impugned notification in the present proceeding shall also be subject to the outcome of the decision of the Supreme Court." "The adjudication of the show cause notice dated 23.09.2023 may proceed but if the final order is passed against the petitioner, the same shall not be implemented." "Considering the circumstances that no documents were filed by the Petitioner along with the reply to the SCN and keeping in mind the order dated 28th December, 2023 passed by this Court, this Court is of the opinion that the Petitioner shall be given an opportunity to file a fresh reply along with any relevant documents within a period of 30 days." "Upon filing of the reply, the Adjudicating Authority shall issue upon the Petitioner, a notice for personal hearing... The reply filed by the Petitioner to the SCNs along with the submissions made by the Petitioner during the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh orders with respect to the SCNs shall be passed accordingly." Core principles established include:
Final determinations on each issue are deferred to the Supreme Court's ruling, with this Court directing fresh adjudication proceedings to ensure fairness and compliance with natural justice principles.
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