2025 (5) TMI 1200 - HC - GST

Extension of time limit of issuance of Show Cause Notice (SCN) u/s 73 / 74 - validity of Notification No. 09/2023-Central Tax - procedural requirements under Section 168A for prior to the issuance of Notification - period of limitation - seeking rectification of the impugned orders - Challenging the SCN and impugned order - HELD THAT - This Court is of the opinion that the impugned orders do not deserve to be interfered with. Therefore the petitions are disposed of with liberty to the Petitioner to avail its appellate remedy along with the prescribed pre-deposit under Section 107 of the Central/Delhi Goods and Services Tax Act 2017. Considering the present writ petitions were pending before this Court during the period of limitation if the Petitioner avails its appellate remedy by 10th July 2025 the concerned Appellate Authority shall not dismiss the appeals on the grounds of limitation and shall hear the cases on their merits and pass a comprehensive order in both the Show Cause Notices. 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. However it is again made clear that the issue in respect of the validity of the impugned notification is left open and the order of the appellate 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 . 2025 (4) TMI 60 - SC ORDER . Petitions are disposed of in these terms.

Summary

The core legal questions considered by the Court include:

(i) The validity and legality of Show Cause Notices dated 23rd September 2023 and 1st December 2023, and the subsequent orders dated 27th December 2023, 11th April 2024, and 26th July 2024;

(ii) The validity and procedural correctness of Notification No. 09/2023-Central Tax dated 31st March 2023 issued under the Central Goods and Services Tax Act, 2017 (hereinafter "GST Act");

(iii) Whether the impugned notifications, issued purportedly under Section 168A of the GST Act, comply with the statutory requirements, including prior recommendation of the GST Council;

(iv) The impact of the pendency of related proceedings before the Supreme Court on the adjudication of the present petitions;

(v) Whether the Petitioners were afforded adequate opportunity of hearing and whether the impugned orders were passed ex-parte without due consideration of replies;

(vi) The procedural and substantive rights of the Petitioners to pursue appellate remedies, including the question of limitation and pre-deposit under Section 107 of the GST Act.

Issue-wise Detailed Analysis

1. Validity of the Impugned Notifications under Section 168A of the GST Act

The legal framework centers on Section 168A of the GST Act, which mandates that any extension of the time limit for adjudication of show cause notices and passing of orders requires prior recommendation of the GST Council. The impugned Notification No. 09/2023 was issued on 31st March 2023, and its validity was challenged on grounds that the proper procedure under Section 168A was not followed.

The Court noted that this issue was extensively considered in a batch of related matters, including a lead case where the Court observed that Notification No. 09/2023 was issued following the GST Council's recommendation, thus prima facie complying with Section 168A. However, Notification No. 56/2023 was challenged for being issued without prior recommendation, with ratification only after issuance, which was found to be procedurally improper by some High Courts.

The Court further noted conflicting judicial opinions across various High Courts: the Allahabad and Patna High Courts upheld the notifications' validity, while the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court raised serious doubts on the validity of Notification No. 56/2023, and this issue is presently pending before the Supreme Court in S.L.P No. 4240/2025.

The Supreme Court's order in the said SLP acknowledged the cleavage of opinion and issued notice, indicating that the ultimate determination on the validity of these notifications is pending.

The Court accordingly refrained from expressing any final opinion on the vires of the notifications, recognizing the binding nature of the Supreme Court's forthcoming decision and judicial discipline in avoiding conflicting rulings.

2. Impact of Pending Supreme Court Proceedings on Adjudication

Given the pendency of the Supreme Court proceedings, the Court examined whether it should proceed to adjudicate the petitions on merits or await the apex court's ruling. The Punjab and Haryana High Court had earlier disposed of connected petitions, refraining from deciding on the validity of Section 168A and related notifications, and directed that the cases be governed by the Supreme Court's decision.

This Court adopted a similar stance, noting that the various High Courts' divergent views and the apex court's intervention necessitate judicial restraint. The Court disposed of several petitions with the observation that the validity of the impugned notifications shall be subject to the Supreme Court's outcome, thereby preserving the status quo and avoiding inconsistent rulings.

3. Adequacy of Opportunity of Hearing and Consideration of Replies

The Petitioners contended they were not properly heard before passing of the impugned orders and that their replies were not duly considered, resulting in ex-parte adjudication and imposition of substantial demands and penalties.

The Court scrutinized the records and found that the Petitioners had indeed filed replies to the Show Cause Notices and that personal hearings were granted but not availed. The Petitioners also filed rectification applications against the impugned orders, which were rejected.

On this basis, the Court concluded that the impugned orders did not warrant interference on grounds of denial of natural justice. The Court emphasized that the Petitioners had adequate opportunity to present their case but failed to utilize it effectively.

4. Appellate Remedies and Limitation

The Court acknowledged that the Petitioners may still pursue appellate remedies under the GST Act. It granted liberty to the Petitioners to file appeals with the prescribed pre-deposit under Section 107 of the GST Act.

Importantly, the Court directed that if appeals are filed by 10th July 2025, the Appellate Authority shall not reject them on the ground of limitation and shall decide the appeals on merits. This direction safeguards the Petitioners' rights, especially considering that the writ petitions were pending during the limitation period.

The Court also mandated that access to the GST Portal be ensured for the Petitioners to facilitate access to notices and related documents, ensuring procedural fairness in appellate proceedings.

5. Preservation of Rights and Open Questions

The Court explicitly left open the question of the validity of the impugned notifications, making clear that the appellate authority's orders shall be subject to the Supreme Court's decision in S.L.P No. 4240/2025.

All rights and remedies of the parties remain open, ensuring that the ultimate adjudication will be comprehensive and consistent with the apex court's ruling.

Significant Holdings

"The validity of the impugned notifications therein shall be subject to the outcome of the proceedings before the Supreme Court."

"The impugned orders do not deserve to be interfered with as the Petitioners had filed replies and were granted personal hearings which were not availed."

"If the Petitioner avails its appellate remedy by 10th July 2025, the concerned Appellate Authority shall not dismiss the appeals on the grounds of limitation and shall hear the cases on their merits and pass a comprehensive order."

"All the rights and remedies of the parties are left open."

The Court established the core principle that where there is a pending Supreme Court decision on the validity of statutory notifications, subordinate courts must exercise judicial restraint and avoid conflicting rulings. It also reinforced the procedural safeguards under the GST Act, emphasizing the necessity of prior GST Council recommendation for extending adjudication timelines and the importance of affording parties adequate opportunity of hearing.

Finally, the Court balanced the need for procedural fairness with judicial discipline by allowing appeals to be heard on merits despite limitation issues, thereby protecting the Petitioners' substantive rights while awaiting the Supreme Court's authoritative pronouncement.