2025 (5) TMI 1207 - HC - GST

Extension of time limit of issuance of SCN u/s 73 / 74 - validity and vires of Notification No. 56/2023-Central Tax Notification No. 9/2023-Central Tax and Notification No. 9/2023-State Tax - procedural requirements under Section 168A for prior to the issuance of notifications - No knowledge of the issuance of SCN - Challenging the SCN and impugned order - HELD THAT - There is no doubt that after 16th January 2024 changes have been made to the GST portal and the Additional Notices Tab has been made visible. However in the present case the writ petition was filed in the year 2024 raising issues as to the validity of the impugned notifications. Under such circumstances considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner the matter deserves to be remanded back to the concerned Adjudicating Authority. Accordingly the impugned order is set aside. The Petitioner is granted time till 10th July 2025 to file the reply to SCN. Upon filing of the reply the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner. The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly. 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 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 of this Court in Engineers India Limited v. Union of India Ors. 2025 (4) TMI 60 - SC ORDER . All rights and remedies of the parties are left open. Access to the GST Portal shall be provided to the Petitioner to enable uploading of the reply as also access to the notices and related documents. The present writ petition is disposed of in above terms.

Summary

The core legal questions considered by the Court include:

1. Whether the show cause notice (SCN) dated 29th May, 2024 and the consequent adjudication order dated 2nd August, 2024, issued by the Department of Trade & Taxes, Government of N.C.T. of Delhi, are valid, particularly in light of procedural compliance and opportunity to be heard.

2. The vires and validity of Notification No. 56/2023-Central Tax dated 28th December, 2023, Notification No. 9/2023-Central Tax dated 31st March, 2023, and Notification No. 9/2023-State Tax dated 22nd June, 2023, issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), especially regarding the extension of time limits for adjudication under the GST regime.

3. Whether the procedural requirements under Section 168A of the GST Act, including the prior recommendation of the GST Council, were complied with before issuing the impugned notifications.

4. The effect of the notices being uploaded under the 'Additional Notices Tab' on the GST portal and whether this mode of service deprived the petitioner of a fair opportunity to respond and be heard.

5. The appropriate relief and procedural course in cases where the validity of notifications is under judicial scrutiny and the adjudication orders have been passed ex-parte.

Issue-wise Detailed Analysis

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

The legal framework centers on Section 168A of the GST Act, which governs the extension of time limits for adjudication of show cause notices and passing of orders under Sections 73 and 74 of the Act. The section requires that any extension of limitation periods must be preceded by a recommendation from the GST Council.

The Court examined the procedural propriety of Notifications No. 9 and 56 of 2023 (Central Tax) and 9/2023 (State Tax). The challenge to Notification No. 56/2023 (Central Tax) was that it was issued without the prior recommendation of the GST Council, and ratification was obtained only after issuance, which allegedly contravenes the statutory mandate. Additionally, Notification No. 56/2023 (State Tax) was challenged for being issued after the expiry of the limitation period under Notification No. 13 of 2022 (State Tax).

The Court noted divergent judicial opinions across various High Courts: the Allahabad and Patna High Courts upheld the validity of these notifications, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court made observations on invalidity without deciding the matter conclusively. The Supreme Court has admitted a Special Leave Petition (SLP No. 4240/2025) to resolve these conflicting views, particularly focusing on whether the time limits for adjudication could be extended by notifications issued under Section 168A.

The Court acknowledged that the matter is sub judice before the Supreme Court, and several other High Courts have refrained from expressing opinions on the vires of Section 168A and the notifications, deferring to the Supreme Court's ultimate decision.

Service of Show Cause Notices via GST Portal and Opportunity to be Heard

The petitioner contended that the SCN was uploaded on the 'Additional Notices Tab' of the GST portal, which was not adequately visible or brought to their attention, resulting in non-filing of replies and absence of personal hearings. Consequently, adjudication orders were passed ex-parte, causing substantial demands and penalties.

The Department contended that after 16th January, 2024, the GST portal was rectified to make notices under the 'Additional Notices Tab' visible to taxpayers.

The Court, referencing its earlier decisions and precedents such as in W.P.(C) 13727/2024 (Neelgiri Machinery) and Satish Chand Mittal v. Sales Tax Officer, held that mere uploading of notices on a less conspicuous tab does not satisfy the requirement of proper service. The Court emphasized the fundamental principle that a party must be given a fair opportunity to be heard before adverse orders are passed. The Court remanded the matter to the adjudicating authority to afford the petitioner an opportunity to file replies and appear for personal hearings, setting aside the impugned demand orders.

Procedural Relief and Interim Measures Pending Final Adjudication

Given the pending Supreme Court proceedings on the validity of the impugned notifications, the Court adopted a cautious approach. It disposed of petitions subject to the outcome of the Supreme Court's decision and retained matters involving parallel State notifications for further consideration.

The Court granted the petitioner time until 10th July, 2025, to file replies to the SCN and mandated that personal hearing notices be communicated not only via the GST portal but also by email and mobile communication to ensure actual notice. The adjudicating authority was directed to consider the petitioner's submissions afresh and pass orders accordingly.

The Court explicitly left open the question of the notifications' validity, making any fresh orders subject to the Supreme Court's ruling in SLP No. 4240/2025 and related proceedings before this Court.

Application of Law to Facts and Treatment of Competing Arguments

The Court balanced the statutory framework with principles of natural justice. While acknowledging the Government's authority to extend limitation periods under the GST Act, it underscored strict compliance with procedural safeguards, including the GST Council's recommendation and proper communication to taxpayers.

On the petitioner's side, the Court accepted that lack of proper notice and inability to respond or avail personal hearings constituted a violation of the right to be heard. The Department's argument that portal corrections post-January 2024 addressed the issue was insufficient to cure past procedural lapses.

The Court's approach was to ensure procedural fairness without prejudging the substantive validity of the notifications, thereby preserving the parties' rights pending higher judicial determination.

Significant Holdings

"It is the petitioner's case that he had not received the impugned SCN and, therefore, he had no opportunity to respond to the same. For the same reason, the petitioner claims that he had not appear for a personal hearing before the Adjudicating Authority..."

"Be that as it may, intention is to ensure that the Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default."

"The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly."

"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 Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court..."

The Court established the core principle that procedural fairness, including proper service and opportunity for personal hearing, is indispensable in tax adjudication proceedings, regardless of the validity of the underlying notifications extending limitation periods.

Final determinations included setting aside impugned orders passed ex-parte due to defective service, remanding matters for fresh adjudication after opportunity to be heard, and deferring the question of the notifications' validity to the Supreme Court.