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2025 (5) TMI 1192 - HC - GSTExtension of time limits for adjudication of show cause notices - validity of Notification No. 9/2023-Central Tax and Notification No. 56/2023-Central Tax - procedural requirements under Section 168A for prior to the issuance of notification - non-service of the Show Cause Notice - suspension of GST registration - Challenging the SCN and impugned order - HELD THAT - A perusal of the above Show Cause Notice makes it clear that the Petitioner s GST Portal remained suspended from 24th July 2023. It is further noticed that the Petitioner has not filed a reply to the Show Cause Notice dated 29th May 2024 from which the impugned order arises. The personal hearing even though granted on 23rd August 2024 has not been availed by the Petitioner. Considering the above position and the fact that the opportunity to file the reply or attend personal hearings has not been availed of this Court is of the opinion that the Petitioner ought to be provided another opportunity to be heard on merits. Accordingly the impugned order is set aside and the matter is relegated to the Adjudicating Authority to be heard on merits. The Petitioner is permitted to file a reply by 10th July 2025. Upon such reply being filed the Adjudicating Authority shall provide a personal hearing to the Petitioner and the notice for the same shall be sent to the following email address and Phone number. All the rights and remedies of the parties are left open. Access to the GST Portal if not already available shall be ensured to be provided to the Petitioner to enable access to the notices and related documents. It is again made clear that the issue in respect of the validity of the impugned notifications is left open and the order of the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court in M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax Ors and this Court in Engineers India Limited v. Union of India Ors. 2025 (4) TMI 60 - SC ORDER . The petition is disposed of in the above terms.
1. ISSUES PRESENTED and CONSIDERED
- Whether the impugned order dated 27th August, 2024 passed by the Sales Tax Officer is liable to be set aside, given the Petitioner's claim of non-service of the Show Cause Notice dated 29th May, 2024 and suspension of GST registration from 24th July, 2023. - The vires and validity of Notification No. 9/2023-Central Tax dated 31st March, 2023 and Notification No. 56/2023-Central Tax dated 28th December, 2023 issued under Section 168A of the Central Goods and Services Tax Act, 2017, particularly whether proper procedure including prior recommendation of the GST Council was followed. - Whether extension of time limits for adjudication of show cause notices and passing of orders under Section 73 of the GST Act and SGST Act for the financial year 2019-2020 by issuing the impugned notifications is legally permissible. - The procedural fairness and natural justice aspects concerning the opportunity of the Petitioner to file replies and avail personal hearings in the adjudication process. - The impact of pending challenges and differing High Court decisions on the validity of the impugned notifications and the effect of the Supreme Court's ongoing consideration of the same on the present proceedings. 2. ISSUE-WISE DETAILED ANALYSIS Validity of the Impugned Notifications under Section 168A of the GST Act The impugned notifications were challenged on the ground that the mandatory procedure under Section 168A of the Central Goods and Services Tax Act, 2017, which requires prior recommendation of the GST Council before extending deadlines, was not complied with. Notification No. 9/2023 was issued following the GST Council's recommendation, whereas Notification No. 56/2023 was issued without such prior recommendation and ratification was given only post issuance, rendering it ultra vires according to the Petitioner. The Court noted that various High Courts have taken divergent views on the validity of these notifications. The Allahabad and Patna High Courts upheld the notifications, while the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court expressed reservations about Notification No. 56/2023, and this judgment is presently under consideration by the Supreme Court in S.L.P No. 4240/2025. The Supreme Court has issued notices and is examining whether the time limit for adjudication under Section 73 of the GST Act for the financial year 2019-2020 could be extended by the impugned notifications. The Court acknowledged the cleavage of opinion among High Courts and deferred final adjudication pending Supreme Court's decision. The Punjab and Haryana High Court, while refraining from expressing an opinion on the validity of Section 168A and the impugned notifications due to pending Supreme Court proceedings, directed that interim orders passed would continue to operate and the final decision of the Supreme Court would be binding. Procedural Fairness and Opportunity to be Heard The Petitioner contended that the Show Cause Notice dated 29th May, 2024 was not served and no hearing notice was issued, primarily because the Petitioner's GST registration was suspended from 24th July, 2023 based on an earlier Show Cause Notice dated 24th July, 2023. The Petitioner claimed lack of access to the GST portal and hence no knowledge of the subsequent notice. The Court examined the Show Cause Notice dated 24th July, 2023, which suspended the Petitioner's GST registration and directed a reply within seven working days. It was noted that the Petitioner had neither filed a reply to the Show Cause Notice dated 29th May, 2024 nor availed the personal hearing granted on 23rd August, 2024. The Court found that the Petitioner had not effectively availed the opportunity to be heard on merits. Despite this, the Court emphasized the principles of natural justice and procedural fairness, holding that the Petitioner ought to be provided another opportunity to file a reply and be heard. The impugned order was set aside, and the matter was remitted to the Adjudicating Authority with directions to provide a personal hearing and ensure access to the GST portal for the Petitioner. Effect of Pending Supreme Court Proceedings and Divergent High Court Judgments The Court acknowledged the ongoing litigation concerning the validity of the impugned notifications before the Supreme Court and other High Courts. It emphasized judicial discipline by refraining from expressing a conclusive view on the validity of the notifications and instead aligned with the approach of other High Courts to await the Supreme Court's final decision. The Court clarified that the adjudication order passed by the Adjudicating Authority following the rehearing would be subject to the outcome of the Supreme Court's decision in S.L.P No. 4240/2025 and the Court's own decision in related matters. 3. SIGNIFICANT HOLDINGS "The Petitioner ought to be provided another opportunity to be heard on merits." "All the rights and remedies of the parties are left open." "Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable access to the notices and related documents." "The issue in respect of the validity of the impugned notifications is left open and the order of the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court." Core principles established include the adherence to procedural fairness even where statutory deadlines and notifications are challenged, and the necessity to provide parties an opportunity to be heard before adverse orders are passed. The Court also emphasized judicial restraint by deferring to the Supreme Court on the validity of contentious notifications issued under Section 168A of the GST Act, thereby maintaining consistency and avoiding conflicting judicial pronouncements. Final determinations on each issue were: - The impugned adjudication order was set aside due to lack of opportunity to be heard and remitted for fresh adjudication with directions to provide personal hearing and access to the GST portal. - The validity of the impugned notifications remains undecided and is to be determined by the Supreme Court. - Interim relief was granted to ensure procedural fairness without prejudging the substantive validity of the notifications.
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