2025 (5) TMI 1205 - HC - GST

Extension of time limit of issuance of 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 - No opportunity of personal hearing - Challenging the SCN and impugned order - HELD THAT - In view of the fact that the Petitioner did not avail of the opportunity of personal hearing the Petitioner is permitted to file an appeal by 10th July 2025 along with pre-deposit. 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 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 . All 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. Petition is disposed of in these terms.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

1. Whether the Show Cause Notice dated 29th May 2023 and the subsequent demand order dated 31st August 2024 issued by the Sales Tax Officer are valid and sustainable.

2. The vires and validity of Notification No. 56/2023-Central Tax dated 28th December 2023, specifically whether it was issued in accordance with the procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (hereinafter "GST Act").

3. Whether the extension of time limits for adjudication under Section 73 of the GST Act and the corresponding State GST Act for the financial year 2019-2020 granted by Notification No. 56/2023 is legally permissible.

4. The procedural fairness and opportunity of personal hearing afforded to the Petitioner in the adjudication proceedings, particularly in light of ex-parte orders passed due to non-appearance.

5. The impact of ongoing judicial scrutiny and conflicting High Court decisions on the validity of the impugned notifications and the appropriate course of action pending final adjudication by the Supreme Court.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Show Cause Notice and Demand Order

The Petitioner challenged the Show Cause Notice dated 29th May 2023 and the demand order dated 31st August 2024 issued by the Sales Tax Officer, alleging procedural irregularities and contesting the basis of demand.

The Court noted that the Petitioner had filed a reply to the Show Cause Notice on 29th June 2024 and was also given an opportunity for personal hearing, which was not availed. The Court observed that the failure to appear deprived the Petitioner of the opportunity to present its case before the adjudicating authority.

Given these facts, the Court permitted the Petitioner to file an appeal by 10th July 2025 along with the requisite pre-deposit, thereby allowing a remedy to challenge the demand order through appellate proceedings. The Court emphasized that all rights and remedies remain open to the parties.

Issue 2 & 3: Validity and Procedural Compliance of Notification No. 56/2023-Central Tax

The principal legal framework governing the issuance of the impugned notification is Section 168A of the GST Act, which mandates that any extension of time limits for adjudication 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 recommendation from the GST Council, and that the ratification was given only after issuance, thus violating the statutory mandate.

The Court examined the broader judicial landscape, noting that various High Courts have taken divergent views on this issue. The Allahabad and Patna High Courts upheld the validity of the notification, whereas the Guwahati High Court quashed it. The Telangana High Court expressed reservations but did not conclusively decide the issue.

The matter is currently pending before the Supreme Court in Special Leave Petition No. 4240/2025, which is considering whether the time limits under Section 73 of the GST Act for adjudication can be extended by notifications issued under Section 168A without prior GST Council recommendation.

Given this ongoing litigation and the conflicting High Court decisions, the Court refrained from expressing any definitive opinion on the validity of Notification No. 56/2023 and related notifications. Instead, it acknowledged that the final determination rests with the Supreme Court.

Issue 4: Procedural Fairness and Opportunity of Hearing

The Court addressed submissions that even if the impugned notifications are upheld, the Petitioners should be granted relief on grounds of procedural fairness. It was highlighted that many Petitioners were unable to file replies or avail personal hearings, leading to ex-parte adjudication and imposition of substantial demands and penalties.

The Court expressed a prima facie view that, depending on the category of petitions, orders could be passed to afford Petitioners an opportunity to place their case before the adjudicating authority. This could include permitting appellate remedies without prejudging the validity of the notifications.

This approach was reflected in the Court's directions allowing the Petitioner to file appeals and ensuring access to the GST Portal for notices and related documents.

Issue 5: Impact of Pending Supreme Court Proceedings and Conflicting High Court Decisions

The Court noted that several writ petitions challenging the impugned notifications were pending before various High Courts and the Supreme Court. The Punjab and Haryana High Court, while refraining from expressing views on the vires of Section 168A and the notifications, directed that all connected cases be governed by the Supreme Court's decision in SLP No. 4240/2025.

Similarly, the Court in the present matter disposed of petitions subject to the outcome of the Supreme Court proceedings, thereby maintaining judicial discipline and avoiding conflicting rulings.

The Court emphasized that the interim orders passed in various High Courts would continue to operate and be governed by the Supreme Court's final adjudication.

SIGNIFICANT HOLDINGS

On the validity of Notification No. 56/2023-Central Tax, the Court held:

"The validity of the impugned notifications is presently under consideration before the Supreme Court."

Regarding procedural fairness, the Court stated:

"Depending upon the categories of petitions, orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases, proceedings including appellate remedies may be permitted to be pursued by the Petitioners, without delving into the question of the validity of the said notifications at this stage."

In relation to the Petitioner's failure to avail personal hearing, the Court observed:

"In view of the fact that the Petitioner did not avail of the opportunity of personal hearing, the Petitioner is permitted to file an appeal by 10th July, 2025 along with pre-deposit."

On the broader judicial approach to conflicting High Court decisions and pending Supreme Court adjudication, the Court noted:

"Keeping in view the judicial discipline, we refrain from giving our opinion with respect to the vires of Section 168-A of the Act as well as the notifications issued in purported exercise of power under Section 168-A of the Act which have been challenged, and we direct that all these present connected cases shall be governed by the judgment passed by the Hon'ble Supreme Court and the decision thereto shall be binding on these cases too."

Core principles established include:

- The procedural requirement of prior GST Council recommendation under Section 168A is critical for the validity of notifications extending adjudication timelines.

- Judicial restraint is warranted when the Supreme Court is seized of the matter and conflicting High Court decisions exist.

- Procedural fairness and opportunity for hearing remain fundamental, and adjudicatory authorities must provide Petitioners a chance to be heard before passing orders, especially where ex-parte orders have been passed.

- Interim relief and appellate remedies should be available to Petitioners pending final adjudication on the validity of notifications.