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2025 (5) TMI 1189 - HC - GSTExtension of time limit of issuance of SCN u/s 73 / 74 - Validity of Notification No. 9/2023-Central Tax Notification No. 56/2023-Central Tax as also the Notification No. 09/2023-State Tax and Notification No. 56/2023-State Tax - procedural requirements under Section 168A for prior to the issuance of notifications - violation of the principles of natural justice - No opportunity to file a reply to the SCN - Challenging the SCN and impugned order - HELD THAT - This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCN and the consequent impugned order have been passed without hearing the Petitioner an opportunity ought to be afforded to the Petitioner to contest the matter on merits. Accordingly the impugned order is set aside. 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. The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly. However it is made clear that the issue in respect of the validity of the impugned notifications is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court in Engineers India Limited v. Union of India Ors. 2025 (4) TMI 60 - SC ORDER . All rights and remedies of the parties are left open. Access to the GST Portal shall be provided to the Petitioner to enable uploading of the reply as also access to the notices and related documents. The present writ petition is disposed of in above terms.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Validity of the Impugned Notifications under Section 168A of the GST Act Relevant legal framework and precedents: Section 168A of the GST Act requires that any extension of the time limit for adjudication of show cause notices and passing orders must be preceded by a recommendation of the GST Council. The impugned notifications-Central Tax Notification Nos. 9/2023 and 56/2023, and corresponding State Tax notifications-purportedly extend these deadlines. Several High Courts have considered the validity of these notifications with divergent outcomes: the Allahabad High Court upheld Notification No. 9/2023 (Central Tax), the Patna High Court upheld Notification No. 56/2023 (Central Tax), while the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court expressed reservations regarding Notification No. 56/2023 (Central Tax) and its observations are under consideration by the Supreme Court in SLP No. 4240/2025. Court's interpretation and reasoning: The Court noted the cleavage of opinion among various High Courts on the validity of the impugned notifications and acknowledged that the Supreme Court is seized of the matter. The Supreme Court's order dated 21st February 2025 highlights the central issue of whether the time limits under Section 73 of the GST Act could be extended by the impugned notifications under Section 168A. Application of law to facts: While the Court recognized the ongoing judicial scrutiny, it refrained from expressing an opinion on the validity of the impugned notifications, respecting judicial discipline and awaiting the Supreme Court's final determination. The Punjab and Haryana High Court similarly deferred to the Supreme Court's decision and maintained interim orders. Treatment of competing arguments: The Court considered submissions challenging the notifications on procedural grounds, including the absence of prior GST Council recommendation or improper timing of issuance. However, it deferred these issues to the Supreme Court, which is the appropriate forum to resolve the conflicting judicial views. Conclusions: The Court held that the question of the validity of the impugned notifications remains open and is subject to the Supreme Court's final adjudication. Opportunity to be Heard and Principles of Natural Justice Relevant legal framework and precedents: The principles of natural justice require that a party against whom adverse action is proposed must be given a fair opportunity to present their case, including filing a reply to a show cause notice and being heard before passing an order. Court's interpretation and reasoning: The petitioner contended that no opportunity was afforded to file a reply to the SCN and that the impugned order was passed ex-parte, being nonspeaking, cryptic, and vague. The Court examined the impugned order, which explicitly noted "No reply/clarification filed by the defaulter firm," indicating the petitioner's non-participation. Key evidence and findings: The absence of any reply or clarification from the petitioner and the cryptic nature of the impugned order were critical facts. The Court found that the petitioner was denied a hearing, violating natural justice. Application of law to facts: The Court concluded that the impugned order was liable to be set aside for failure to afford the petitioner an opportunity to be heard. The Court emphasized the necessity of allowing the petitioner to file a reply and participate in personal hearings before any final adjudication. Treatment of competing arguments: While the respondents may have relied on the validity of the notifications and the impugned order, the Court prioritized fundamental procedural fairness over the merits of the underlying tax demand at this stage. Conclusions: The Court set aside the impugned order and directed the adjudicating authority to provide the petitioner with an opportunity to file a reply and be heard through personal hearing, ensuring compliance with natural justice. Interim Relief and Procedural Directions Pending Supreme Court's Decision Court's interpretation and reasoning: Recognizing the ongoing litigation and conflicting judicial pronouncements, the Court sought to balance the interests of justice by allowing petitioners to contest their cases on merits without prejudicing the outcome of the Supreme Court's decision on the notifications' validity. Application of law to facts: The Court categorized pending cases and proposed that, depending on the category, petitioners may be permitted to file replies, avail personal hearings, and pursue appellate remedies. This approach avoids premature finality while preserving judicial resources. Conclusions: The Court granted the petitioner time to file a reply by 10th July 2025, mandated issuance of personal hearing notices, and directed that fresh orders be passed after considering the petitioner's submissions. The Court explicitly left open the question of the notifications' validity, subject to the Supreme Court's ruling. 3. SIGNIFICANT HOLDINGS "The Court has perused the records. In this petition, as mentioned above, no reply to the SCN has been filed by the Petitioner. Relevant portion of the impugned order reads as under: 'Observations and conclusion of the assessing authority : Agreed with SCN amount Specific reasons entered No reply/clarification filed by the defaulter firm.' This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCN and the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner to contest the matter on merits." Core principles established:
Final determinations on each issue:
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