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2025 (5) TMI 763 - HC - GSTChallenge to SCN consequent order N/N. 9/2023-Central Tax dated 31st March 2023 and N/N. 56/2023-Central Tax dated 28th December 2023 - Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner - violation of principes of natural justice - HELD THAT - The Court has heard the parties. In fact 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 on the Additional Notices Tab had remanded the matter. There is no doubt that after 16th January 2024 changes have been made to the GST portal and the Additional Notices Tab has been made visible. However in the present case the writ petition was filed in the year 2024 raising issues as to the validity of the impugned notifications. Under such circumstances considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner the matter deserves to be remanded back to the concerned Adjudicating Authority. The Petitioner is granted time till 10th July 2025 to file the reply to SCN. Upon filing of the reply the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner - petition disposed off by way of remand.
The core legal questions considered in this judgment include:
1. Whether the impugned Notifications Nos. 9/2023-Central Tax and 56/2023-Central Tax issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act) are valid and in compliance with statutory requirements, particularly regarding the necessity of prior GST Council recommendation and adherence to procedural mandates. 2. Whether the extension of time limits for adjudication of show cause notices (SCNs) and passing of orders under Section 73 of the GST Act and corresponding State GST Acts for the financial year 2019-20, as effected by these notifications, is legally permissible. 3. Whether the petitioner was afforded a fair opportunity to respond to the SCN dated 28th May 2024, given the manner of service through the GST portal's 'Additional Notices Tab' and whether the impugned adjudication order was passed ex-parte without due process. 4. The impact of ongoing judicial proceedings in various High Courts and the Supreme Court on the validity of the impugned notifications and consequent orders. Issue-wise Detailed Analysis: Validity of the Impugned Notifications (Nos. 9/2023 and 56/2023-Central Tax): The legal framework revolves around Section 168A of the Central GST Act, which mandates that any extension of the time limit for adjudication of SCNs and passing of orders requires prior recommendation by the GST Council. The petitioner challenged the notifications on grounds that the proper procedure was not followed, particularly contending that Notification No. 56/2023 was issued without prior GST Council recommendation, and ratification was given post issuance, thus violating the statutory mandate. The Court noted that this issue has been the subject of extensive litigation across various High Courts with divergent views: the Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 respectively, while the Guwahati High Court quashed Notification No. 56. The Telangana High Court expressed reservations regarding Notification No. 56, and this matter is presently sub judice before the Supreme Court in SLP No. 4240/2025. The Supreme Court's limited order in the said SLP highlighted the cleavage of opinion among High Courts and issued notice for hearing, indicating the central legal question whether the time-limit extensions under Section 168A could be validly effected by these notifications. The Delhi High Court, recognizing the pendency of the Supreme Court proceedings and judicial discipline, refrained from expressing an opinion on the vires of the notifications and aligned with the Punjab and Haryana High Court's approach to await the Supreme Court's final determination. Opportunity to be Heard and Validity of Adjudication Proceedings: The petitioner contended that the SCN dated 28th May 2024 was uploaded on the GST portal under the 'Additional Notices Tab', which was not adequately visible or brought to its notice, resulting in non-filing of replies and absence from personal hearings. Consequently, the impugned order was passed ex-parte, violating principles of natural justice. The Respondent Department asserted that post 16th January 2024, the GST portal was rectified to ensure visibility of notices and that the SCN was issued after this date. The Court relied on its prior decisions where similar issues were considered. It referred to the judgment in W.P.(C) 13727/2024 (Neelgiri Machinery) and other precedents where the Court had remanded matters back to the adjudicating authorities to ensure fair opportunity to file replies and participate in hearings, especially where notices were uploaded under the 'Additional Notices Tab' which was not adequately accessible. The Court emphasized that orders should not be passed in default and that the petitioner must be given an opportunity to be heard on merits. It underscored the importance of procedural fairness and transparency in adjudication under GST law. Application of Law to Facts: Given the factual matrix that the petitioner did not receive proper notice and was deprived of opportunity to respond to the SCN, the Court set aside the impugned demand orders dated 23rd April 2024 and 5th December 2023. It directed the petitioner to file replies within thirty days to the SCNs dated 4th December 2023 and 23rd September 2023. The Court mandated that hearing notices shall not only be uploaded on the portal but also communicated via e-mail and mobile to ensure actual receipt. The Court remanded the matter to the adjudicating authority to consider the petitioner's submissions afresh and pass orders in accordance with law, ensuring compliance with principles of natural justice. Treatment of Competing Arguments: The Court acknowledged the Respondent Department's submission about rectification of the GST portal but found that the petitioner's grievance regarding lack of notice and opportunity was substantiated. The Court balanced the need to uphold procedural fairness with the ongoing legal uncertainty regarding the validity of the impugned notifications, leaving the question of their vires open for the Supreme Court's decision. The Court also recognized the multiplicity of cases and the varied judicial pronouncements on the issue, demonstrating judicial restraint by not pronouncing on the validity of the notifications but focusing on ensuring fair adjudication in the interim. Conclusions: The Court concluded that: - The impugned adjudication orders passed without affording the petitioner an opportunity to respond and be heard were unsustainable and were set aside. - The petitioner must be granted a fresh opportunity to file replies and participate in hearings, with proper communication of notices beyond mere portal upload. - The question of validity of the impugned notifications remains open and subject to the Supreme Court's final adjudication. - All rights and remedies of the parties are preserved, and access to the GST portal shall be provided to the petitioner for uploading replies and accessing notices. Significant Holdings: The Court's key legal reasoning includes the following verbatim excerpt from its prior order in a similar matter, which it adopted here: "It is the petitioner's case that he had not received the impugned SCN and, therefore, he had no opportunity to respond to the same. For the same reason, the petitioner claims that he had not appear for a personal hearing before the Adjudicating Authority... Possibly, the petitioner did not have access to the Notices as they were projected on the GST Portal under the tab 'Additional Notices & Orders'. The said issue has now been addressed and the 'Additional Notices & Orders' tab is placed under the general menu and adjacent to the tab 'Notices & Orders'. 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 Court established the core principle that procedural fairness and the right to be heard are fundamental in GST adjudication proceedings, and mere technical compliance with portal notifications is insufficient if actual notice is not effectively communicated. Further, the Court underscored the principle of judicial discipline by deferring the question of validity of the impugned notifications to the Supreme Court, thereby preserving the status quo and avoiding conflicting decisions. Finally, the Court's order preserves the petitioner's substantive rights and remedies, ensuring that the adjudication process is conducted in accordance with law and natural justice.
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