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2025 (5) TMI 1194 - HC - GSTExtension of time limit of issuance of Show Cause Notice (SCN) u/s 73 / 74 - Validity of Notification No. 56/2023-Central Tax - procedural requirements under Section 168A for prior to the issuance of notification - Challenging the SCN and impugned order - - HELD THAT - In view of the fact that the GST returns for the year 2019-2020 have been filed belatedly and the Petitioner had full knowledge of the issuance of show cause notice and the consequent impugned order the present petition does not merit consideration. However in the opinion of this Court the Petitioner ought to be given a chance to raise a challenge before the appellate authority. Accordingly the Petitioner is granted time till 10th July 2025 to file an appeal before the appellate authority under Section 107 of the Central Goods and Service Tax Act 2017. If the appeal is filed by the Petitioner before 10th July 2025 along with the mandatory pre-deposit the same shall be adjudicated upon merits and shall not be dismissed on the ground of limitation. However it is recorded that the issue in respect of the validity of the impugned notification has not been pressed by the Petitioner. The present petition is disposed of in said terms.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include: - Whether the show cause notice dated 29th May, 2024 and the consequent order dated 24th August, 2024 issued by the Department of Trade and Taxes, GNCTD, for the Financial Year 2019-20, are valid and sustainable. - The vires and validity of Notification No. 56/2023-Central Tax dated 28th December, 2023, particularly whether it was issued in compliance with the procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (the "GST Act"). - Whether the extension of time limits for adjudication under Section 168A of the GST Act, as provided by the impugned notification, was lawfully granted, especially considering the timing and recommendation of the GST Council. - The implications of various High Courts' conflicting decisions on the validity of the impugned notification and the ongoing Supreme Court proceedings on the same issue. - Whether the Petitioner was denied natural justice by not being afforded an opportunity to file a reply or attend a personal hearing before the issuance of the show cause notice and passing of the impugned order. - Whether the proceedings initiated by the impugned show cause notice and order are barred by limitation, given the filing of GST returns under the Amnesty Scheme. - The appropriate relief and procedural course for the Petitioner in light of the above issues and pending Supreme Court adjudication. 2. ISSUE-WISE DETAILED ANALYSIS Validity of the Impugned Notification No. 56/2023-Central Tax The legal framework revolves around Section 168A of the GST Act, which mandates that any extension of the time limit for adjudication of show cause notices must be preceded by a recommendation from the GST Council. The Petitioner challenged the impugned notification on the ground that it was issued without prior GST Council recommendation, and the ratification was given only after issuance, thereby violating statutory procedure. The Court noted that this issue has been extensively litigated before various High Courts with divergent outcomes. The Allahabad and Patna High Courts upheld the validity of the notification, whereas the Guwahati High Court quashed it. The Telangana High Court raised serious doubts about its validity but refrained from a final decision pending Supreme Court review. The Supreme Court has admitted a Special Leave Petition (SLP No. 4240/2025) on this issue and issued notice, highlighting the cleavage of opinion among High Courts. The Supreme Court's order emphasizes that the key question is whether the time limit for adjudication under Section 73 of the GST Act could be extended by the impugned notifications under Section 168A. In the Punjab and Haryana High Court, the matter was disposed of with interim orders pending Supreme Court adjudication, and judicial discipline was observed by refraining from expressing opinions on the notifications' validity. The present Court acknowledged this judicial landscape and recognized that the validity of the impugned notification is sub judice before the Supreme Court. Consequently, the Court declined to delve into the merits of the vires challenge at this stage. Denial of Opportunity to File Reply and Attend Personal Hearing The Petitioner contended that the show cause notice and subsequent order were passed without affording an opportunity to respond or be heard, thus violating principles of natural justice. The Court noted that the Petitioner had not availed of personal hearings in most cases, resulting in ex-parte orders, which led to substantial demands and penalties. The Court recognized the importance of procedural fairness and indicated a prima facie view that the Petitioner should be given an opportunity to place its case before the adjudicating authority. This approach was considered appropriate irrespective of the ultimate validity of the impugned notification, given the pending Supreme Court proceedings. Limitation and Filing of GST Returns under Amnesty Scheme The Respondent Department argued that the Petitioner filed GST returns for 2019-20 belatedly on 29th June, 2023 under the Amnesty Scheme, and therefore, could not challenge the impugned notification or show cause notice. The Petitioner, in response, agreed to drop the challenge to the notification. The Court observed that the Petitioner had full knowledge of the show cause notice and impugned order and that the petition did not merit further consideration on the merits. However, the Court emphasized that the Petitioner should be allowed to pursue appellate remedies. Relief and Procedural Directions The Court granted the Petitioner time until 10th July, 2025 to file an appeal before the appellate authority under Section 107 of the Central Goods and Services Tax Act, 2017. It was directed that if the appeal is filed with the mandatory pre-deposit within the stipulated time, it shall be adjudicated on merits without dismissal on limitation grounds. The Court clarified that its observations in the present petition would not influence the appellate authority's decision. It also recorded that the Petitioner had not pressed the issue of the notification's validity. 3. SIGNIFICANT HOLDINGS "The validity of the impugned notifications therein shall be subject to the outcome of the proceedings before the Supreme Court in S.L.P. No. 4240/2025." "Since the matter is pending before the Hon'ble Supreme Court, the interim order passed in the present cases, would continue to operate and would be governed by the final adjudication by the Supreme Court on the issues." "If the appeal is filed by the Petitioner before 10th July, 2025, along with the mandatory pre-deposit, the same shall be adjudicated upon merits and shall not be dismissed on the ground of limitation." Core principles established include:
Final determinations: The Court declined to decide on the validity of the impugned notification, deferring to the Supreme Court's pending adjudication. It held that the Petitioner's challenge to the show cause notice and order did not merit further consideration on limitation and procedural grounds but granted the Petitioner the opportunity to file an appeal and seek redressal before the appellate authority. The Court disposed of the petition accordingly.
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