2025 (5) TMI 1206 - HC - GST

Extension of time limit of issuance of SCN u/s 73 / 74 - Validity of Notification No. 56/2023-Central Tax as also the Notification No. 56/2023-State Tax - procedural requirements for compliance of signature and opportunity of hearing - Challenging the SCN and impugned order - HELD THAT - In cases where the challenge is to the parallel State Notifications the same have been retained for consideration by this Court. The lead matter in the said batch in Engineers India Limited v. Union of India Ors. 2025 (4) TMI 60 - SC ORDER . The Show Cause Notice as also the impugned order are not signed by the concerned authority and hence the same are not valid. Further an opportunity to file a reply has not been granted to the Petitioner. Considering the fact that the Petitioner was not granted a proper opportunity to be heard in the opinion of the Court the matter deserves to be remanded back to the concerned Adjudicating Authority. However it is again made clear that the issue in respect of 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 and this Court. Petition is disposed of in these terms. All pending applications are also disposed of.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

- Whether the Show Cause Notice dated 19th December 2023 and the consequent order dated 24th April 2024 issued by the Sales Tax Officer are valid, particularly focusing on procedural compliance such as signature and opportunity of hearing.

- The vires and validity of Notification No. 56/2023-Central Tax dated 28th December 2023 and Notification No. 56/2023-State Tax dated 11th July 2024 (impugned notifications), specifically whether these notifications were issued in compliance with the procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act).

- Whether the extension of time limits for adjudication under Section 73 of the GST Act and SGST Act for the financial year 2019-2020 could be validly effected by the impugned notifications issued under Section 168A of the GST Act.

- The procedural fairness in adjudication proceedings, including whether the petitioner was afforded a proper opportunity to file replies or participate in personal hearings before orders were passed.

- The question of whether the impugned notifications and related orders should be stayed or remanded pending final adjudication by the Supreme Court, given the conflicting High Court judgments and ongoing Supreme Court proceedings.

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 empowers the government to extend the time limit for adjudication of show cause notices and passing of orders beyond the prescribed period, subject to prior recommendation of the GST Council.

Several High Courts have delivered conflicting judgments on the validity of the impugned notifications, particularly Notification No. 56/2023 (Central Tax). The Allahabad High Court upheld Notification No. 9, the Patna High Court upheld Notification No. 56, while the Guwahati High Court quashed Notification No. 56. The Telangana High Court made observations on the invalidity of Notification No. 56 without deciding the issue conclusively.

The Supreme Court has admitted a Special Leave Petition (SLP No. 4240/2025) concerning the validity of these notifications and issued notices, highlighting the cleavage of opinion among High Courts.

Court's Interpretation and Reasoning:

The Delhi High Court noted the ongoing Supreme Court proceedings and the divergent High Court rulings, observing that the issue of validity of the impugned notifications is sub judice before the apex court. The Court refrained from expressing any opinion on the vires of the notifications, respecting judicial discipline and the principle of comity among courts.

Key Evidence and Findings:

The Court relied on the batch of petitions and prior orders, including the Supreme Court's order dated 21st February 2025, which clarified the scope of the challenge and the issues to be considered.

Application of Law to Facts:

Given the pendency of the Supreme Court matter, the Court held the validity of the impugned notifications in abeyance, subject to the Supreme Court's final decision. The Court emphasized that any adjudication or orders passed under these notifications would be provisional and subject to the outcome of the apex court's ruling.

Treatment of Competing Arguments:

The Court acknowledged the petitioners' contention that the notifications were issued without following the mandatory procedure under Section 168A, including the requirement of prior GST Council recommendation. It also noted the respondents' reliance on the notifications and the necessity of extending deadlines for adjudication.

Conclusions:

The Court left the question of the notifications' validity open and deferred to the Supreme Court's decision, directing that the adjudication orders would be subject to the outcome of the apex court proceedings.

Validity and Procedural Compliance of Show Cause Notice and Adjudication Order

Relevant Legal Framework and Precedents:

Principles of natural justice require that a show cause notice and consequent adjudication order must be duly signed by the competent authority and that the party must be given an opportunity to be heard, including filing replies and attending personal hearings.

Court's Interpretation and Reasoning:

The petitioner challenged the Show Cause Notice and the order on the ground that they were not signed by the concerned authority and that no opportunity to file a reply or attend a personal hearing was granted, leading to ex-parte orders.

The Court agreed with the petitioner's submissions, emphasizing the fundamental requirement of affording a fair hearing and procedural propriety in tax adjudication proceedings.

Key Evidence and Findings:

The Court noted the absence of signatures on the impugned show cause notice and order, and the failure to provide the petitioner with an opportunity to file replies or participate in hearings.

Application of Law to Facts:

Applying the principles of natural justice and procedural fairness, the Court found that the impugned orders were not validly passed as the petitioner was denied the opportunity to be heard.

Treatment of Competing Arguments:

While the respondents contended that the notifications empowered them to proceed with adjudication, the Court prioritized procedural fairness over expediency, especially in light of the significant demands and penalties imposed without hearing.

Conclusions:

The Court held that the matter deserved to be remanded to the adjudicating authority for fresh adjudication, granting the petitioner a personal hearing and opportunity to file replies.

Access to GST Portal and Filing of Replies

Relevant Legal Framework:

Taxpayers must be provided access to relevant documents and the GST Portal to enable them to file replies and defend themselves effectively.

Court's Reasoning and Findings:

The Court noted submissions that the petitioner was unable to access the GST Portal and related notices, which further impeded their ability to participate in the proceedings.

Application of Law to Facts:

The Court directed that access to the GST Portal be ensured to the petitioner to facilitate filing of replies and access to all relevant documents.

Conclusion:

The Court mandated that the petitioner be given full access to the GST Portal and related documents as a prerequisite to fresh adjudication.

Effect of Pending Supreme Court Proceedings and Interim Orders

Relevant Legal Framework:

Judicial discipline and principles of comity require subordinate courts to respect the decisions and ongoing proceedings in higher courts, especially the Supreme Court.

Court's Interpretation and Reasoning:

The Court observed that the Supreme Court had admitted the SLP and issued notices on the validity of the impugned notifications, and that other High Courts had either stayed proceedings or disposed of matters subject to the Supreme Court's final decision.

Application of Law to Facts:

The Court disposed of the petition while expressly leaving open the question of the validity of the impugned notifications, subject to the Supreme Court's outcome. It also left all rights and remedies open to the parties.

Conclusion:

The Court aligned its orders with the ongoing Supreme Court proceedings, ensuring that no prejudice is caused to either party pending final adjudication.

3. SIGNIFICANT HOLDINGS

- "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 and this Court."

- "Considering the fact that the Petitioner was not granted a proper opportunity to be heard, in the opinion of the Court, the matter deserves to be remanded back to the concerned Adjudicating Authority."

- "A personal hearing shall be granted to the Petitioner and the notice for the same shall be sent on the following email address."

- "Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to file a reply as also enable access to the notices and related documents."

- The Court emphasized judicial discipline by refraining from expressing any opinion on the validity of the impugned notifications in view of the pending Supreme Court proceedings, thereby preserving the principle of comity among courts.

- The Court established that procedural fairness, including the right to be heard and proper signing of notices and orders, is a fundamental requirement in tax adjudication proceedings, and failure to comply warrants remand and fresh adjudication.

- The Court's final determination was to dispose of the petition with directions for remand and personal hearing, while leaving the substantive question of validity of the notifications to be decided by the Supreme Court.