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2025 (5) TMI 459 - HC - GSTService of SCN - SCN was uploaded on the Additional Tabs and was not within the knowledge of the Petitioner - challenge to N/N. 09/2023-Central Tax dated 31st March 2023 09/2023-State Tax dated 22nd June 2023 56/2023-Central Tax dated 28th December 2023 and 56/2023-State Tax dated 11th July 2024 - principles of natural justice - HELD THAT - This Court had the opportunity to hear a batch of petitions wherein inter alia the impugned notifications had been challenged. The case in DJST Traders Private Limited v. Union of India Ors. 2025 (5) TMI 43 - DELHI HIGH COURT is the lead matter in the said batch of petitions. In the said petition on 22nd April 2025 the parties were heard at length qua the validity of the impugned notifications and accordingly it was held that Broadly there are six categories of cases which are pending before this Court. While the issue concerning the validity of the impugned notifications is presently under consideration before the Supreme Court this Court is of the prima facie view that depending upon the categories of petitions orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases proceedings including appellate remedies may be permitted to be pursued by the Petitioners without delving into the question of the validity of the said notifications at this stage. As observed by this Court in the order dated 22nd April 2025 as well since the challenge to the above mentioned notification is presently under consideration before the Supreme Court in M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax Ors. 2025 (4) TMI 60 - SC ORDER the challenge made by the Petitioner to the impugned notifications in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court. However on facts the SCN was issued on 26th September 2023. The same is stated to have been uploaded on the Additional notices tab and the SCN did not come to the knowledge of the Petitioner. The impugned order has been passed against the Petitioner on 12th December 2023 - considering the fact that the notice was uploaded on the tab prior to the changes effected on the GST portal on 16th January 2024 the Petitioner is permitted to file a reply to the SCN within one month. Conclusion - i) The Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default. ii) The adjudication order shall be subject to the outcome of the SLP pending in the Supreme Court where the impugned notifications are challenged. Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Service of Show Cause Notice (SCN) Uploaded on "Additional Notices" Tab Relevant Legal Framework and Precedents: The GST portal serves as the official platform for communication between the tax authorities and taxpayers. The principle of natural justice mandates that a notice must be brought to the knowledge of the affected party to enable a fair opportunity of hearing. The Court relied on the precedent set in W.P.(C) 13727/2024 titled 'Neelgiri Machinery Through Its Proprietor Mr. Anil Kumar v. Commissioner Delhi Goods And Service Tax And Others', which held that notices uploaded under the "Additional Notices & Orders" tab, which is not directly visible to taxpayers, do not constitute valid service. Court's Interpretation and Reasoning: The Court observed that the SCN was uploaded on the "Additional Notices" tab, a category not conspicuous to the Petitioner. The Department conceded that the GST portal functions differently on the Department's side compared to the taxpayer's side, leading to discrepancies in visibility of notices. The Court emphasized that the intention of the law is to ensure that the Petitioner receives actual notice and is not prejudiced by portal design or technicalities. Key Evidence and Findings: The Petitioner produced a printout from the portal demonstrating that the SCN was only visible under the "Additional Notices & Orders" tab. The Department's status report acknowledged the difference in portal views and that the notices were not adequately accessible to the Petitioner. Application of Law to Facts: Given the lack of effective communication of the SCN, the Court set aside the impugned order dated 12th December 2023, which was passed ex-parte. The Court directed that the Petitioner be afforded an opportunity to file replies and be heard on merits. Treatment of Competing Arguments: While the Department argued that the SCN was uploaded on the portal and thus served, the Court rejected this on the ground that mere upload under a less visible tab does not fulfill the requirement of effective service. Conclusion: The Court held that the SCN was not validly served and remanded the matter for fresh adjudication after providing the Petitioner a fair opportunity to respond and be heard. Issue 2: Validity and Legality of Impugned Notifications under Section 168A of the GST Act Relevant Legal Framework and Precedents: Section 168A of the GST Act mandates that any extension of time limits for adjudication of SCNs and passing of orders must be preceded by a recommendation from the GST Council. The impugned notifications sought to extend such deadlines. The Court noted conflicting High Court decisions: Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court made observations on invalidity, which is currently under Supreme Court consideration in SLP No. 4240/2025. Court's Interpretation and Reasoning: The Court acknowledged the ongoing judicial divergence and the pendency of the Supreme Court's decision on the matter. It refrained from expressing any opinion on the vires of the notifications, deferring to the Supreme Court's ultimate adjudication. Key Evidence and Findings: The Court referred to the detailed orders and observations from various High Courts and the Supreme Court's interim order issuing notice and listing the matter for hearing, highlighting the cleavage of opinions. Application of Law to Facts: The Court held that the challenge to the impugned notifications in the present petition would be subject to the outcome of the Supreme Court's decision. Meanwhile, the Court proposed to deal with the petitions on a prima facie basis, allowing procedural relief without delving into the validity of the notifications. Treatment of Competing Arguments: The Petitioner challenged the notifications as invalid due to procedural irregularities and absence of GST Council recommendation prior to issuance. The Department relied on the notifications' purported validity. The Court balanced these by deferring substantive adjudication to the Supreme Court while ensuring procedural fairness to the Petitioner. Conclusion: The Court reserved the question of validity of the impugned notifications for the Supreme Court and proceeded to grant interim relief to the Petitioner on procedural grounds. Issue 3: Opportunity of Hearing and Fair Adjudication in Light of Ex-parte Orders Relevant Legal Framework and Precedents: Principles of natural justice require that no order be passed without affording the affected party an opportunity to be heard. The Court referred to precedents including Satish Chand Mittal v. Sales Tax Officer and Anant Wire Industries v. Sales Tax Officers, where similar issues of non-communication of SCNs and personal hearing notices were addressed. Court's Interpretation and Reasoning: The Court noted that the Petitioner was unable to file replies or avail personal hearings, resulting in ex-parte orders with huge demands and penalties. It emphasized the necessity of providing an opportunity to the Petitioner to respond and be heard before passing any order. Key Evidence and Findings: The Court found that personal hearing notices were not effectively communicated and that the Petitioner's submissions were not considered due to the lack of knowledge of the SCN. Application of Law to Facts: The Court set aside the demand orders dated 23rd April 2024 and 5th December 2023 and directed that the Petitioner be given a fresh opportunity to file replies within thirty days and be heard in personal hearings. It also mandated that hearing notices be communicated not only via the GST portal but also by email and mobile communication. Treatment of Competing Arguments: The Department's reliance on portal upload as sufficient communication was rejected in favor of ensuring actual notice and hearing. Conclusion: The Court ensured adherence to principles of natural justice by directing fresh proceedings with proper notice and hearing. 3. SIGNIFICANT HOLDINGS The Court held:
Core principles established include:
Final determinations on the issues are:
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