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2025 (5) TMI 465 - HC - GSTChallenge to SCN and N/N. 09/2023-Central Tax dated 31st March 2023 - invalid service of SCN - SCN uploaded on the Additional notices tab and did not come to the knowledge of the Petitioner - violation of principles of natural justice - HELD THAT - Considering that the fact that Portal had been rectified after 16th January 2024 and failure of the Petitioner to provide any justification for not filing the reply or attending the personal hearing the matter in the opinion of the court deserves to be dismissed. The present petition is disposed of with the liberty to the Petitioner to file an appeal in terms of Section 107 of the Act. If the Appeal is filed within 45 days along with the pre-deposit it shall not be dismissed due to limitation and shall be adjudicated on merits.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Validity of Notifications No. 09/2023 and No. 56/2023 under Section 168A of the GST Act Legal Framework and Precedents: Section 168A of the GST Act empowers the Central Government to extend the time limit for adjudication of show cause notices and passing of orders, subject to prior recommendation by the GST Council. The impugned notifications purportedly extend these time limits. The Court noted that previous High Courts have delivered conflicting verdicts on the validity of these notifications. The Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court raised observations on the invalidity of Notification No. 56/2023, and this issue is presently under consideration by the Supreme Court in S.L.P No. 4240/2025. Court's Interpretation and Reasoning: The Court recognized the cleavage of opinion among various High Courts on whether the procedural mandate of prior GST Council recommendation was complied with, especially regarding Notification No. 56/2023, which was issued before ratification by the GST Council. The Court acknowledged that the matter is sub judice before the Supreme Court and deferred to its eventual decision. Key Findings: The Court observed that the notifications are being challenged on grounds of procedural irregularity and validity under the GST Act. It noted that the Supreme Court has issued notices and is considering these issues, thus the Court refrained from expressing a conclusive opinion on the validity of the notifications. Application of Law to Facts: Given the ongoing Supreme Court proceedings and conflicting High Court decisions, the Court held that the challenge to the impugned notifications must be subject to the Supreme Court's outcome. It also noted the interim orders passed by other High Courts and the Supreme Court's notice in the matter. Treatment of Competing Arguments: The Court balanced the submissions of the Petitioner challenging the notifications' validity and the Department's reliance on the notifications to confirm demands. It also considered the interim judicial discipline observed by other High Courts, deferring to the Supreme Court's final adjudication. Conclusion: The Court left the question of the notifications' validity open, subject to the Supreme Court's final decision, and proceeded to consider other issues in the meantime. Legality of Confirmation of Demand and Opportunity to the Petitioner Legal Framework and Precedents: Under the GST Act, a show cause notice must be issued and served properly, and the assessee must be given a fair opportunity to file replies and participate in hearings before any demand is confirmed. Section 107 of the GST Act provides for appeal against orders passed under the Act. Court's Interpretation and Reasoning: The Petitioner contended that the SCN dated 23rd May 2024 was uploaded on the 'Additional Notices' tab of the GST portal but was not accessible, resulting in inability to file replies or attend personal hearings. The Court noted that the predecessor bench had observed that the SCN was uploaded only after changes were made to the GST portal on 16th January 2024. The Petitioner filed an additional affidavit reiterating inaccessibility, which the Department disputed. Key Evidence and Findings: The Court found that the portal issue was rectified after 16th January 2024. The Petitioner failed to provide a satisfactory explanation for the non-filing of replies or non-attendance at hearings. The Court observed that, despite the rectification, the Petitioner did not avail the opportunity to participate in the proceedings. Application of Law to Facts: Given the failure to justify non-participation and the rectification of the portal, the Court concluded that the confirmation of demand could not be set aside merely on grounds of inaccessibility of the SCN, especially when the Petitioner had the opportunity to file an appeal. Treatment of Competing Arguments: The Court considered the Petitioner's plea for relief on grounds of procedural unfairness and the Department's contention that the Petitioner had adequate opportunity post-rectification. The Court sided with the Department on the factual matrix. Conclusion: The Court dismissed the petition on merits but granted liberty to the Petitioner to file an appeal under Section 107 of the GST Act within 45 days along with the requisite pre-deposit, ensuring that such appeal would not be dismissed on limitation grounds and would be adjudicated on merits. Interim Relief and Procedural Directions Pending Supreme Court Decision Legal Framework and Precedents: Judicial discipline requires lower courts to refrain from deciding issues pending before the Supreme Court. Interim reliefs and directions are often granted to preserve parties' rights without prejudicing the ultimate outcome. Court's Interpretation and Reasoning: The Court observed that various High Courts have passed interim orders staying or regulating proceedings pending the Supreme Court's decision on the validity of the impugned notifications. The Punjab and Haryana High Court's order was noted, which refrained from expressing views on the notifications' validity and directed that the matter be governed by the Supreme Court's ruling. Key Evidence and Findings: The Court acknowledged the batch of cases pending before it, categorized broadly, and indicated that reliefs could be tailored to allow parties to pursue appellate remedies or place their stand before adjudicating authorities without prejudging the notifications' validity. Application of Law to Facts: The Court proposed that, depending on the category of the petition, procedural orders could be passed affording opportunity to petitioners to be heard, while keeping the question of the notifications' validity open. Treatment of Competing Arguments: The Court balanced the Petitioners' request for relief due to procedural difficulties with the Department's interest in enforcing tax laws, while maintaining judicial restraint pending the Supreme Court's decision. Conclusion: The Court disposed of the petition with directions for the Petitioner to file appeals where applicable, and clarified that the appellate authority's orders would be subject to the Supreme Court's final determination on the notifications' validity. 3. SIGNIFICANT HOLDINGS "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 notification in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court." "Considering that the fact that Portal had been rectified after 16th January, 2024 and failure of the Petitioner to provide any justification for not filing the reply or attending the personal hearing, the matter in the opinion of the court, deserves to be dismissed." "Accordingly, the present petition is disposed of with the liberty to the Petitioner to file an appeal in terms of Section 107 of the Act. If the Appeal is filed within 45 days along with the pre-deposit it shall not be dismissed due to limitation and shall be adjudicated on merits." Core principles established include:
Final determinations:
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