2025 (5) TMI 1209 - HC - GST

Extension of time limit of issuance of SCN u/s 73 / 74 - Seeking amendment of the petition - validity of Notification No. 56/2023-Central Tax and Notification No. 09/2023-Central Tax - procedural requirements under Section 168A for prior to the issuance of notifications - Challenging the SCN and impugned order - HELD THAT - This Court is of the opinion that since the Petitioner has been unable to file a reply as at the relevant point in time the Petitioner had challenged the SCN itself along with the Notifications one opportunity can be given to the Petitioner to file a reply and to contest the matter on merits. 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 notification 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. 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.

The core legal questions considered by the Court include:

1. Whether the show cause notice dated 29th May, 2024 issued under the Central Goods and Services Tax Act, 2017 (GST Act) for the financial year 2019-20 is valid and sustainable.

2. The vires and validity of Notification No. 56/2023-Central Tax dated 28th December, 2023 and Notification No. 09/2023-Central Tax dated 31st March, 2023 issued under Section 168A of the GST Act, particularly regarding the extension of time limits for adjudication.

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

4. The effect of conflicting High Court decisions on the validity of the impugned notifications and the impact of the pending Supreme Court proceedings on the present petition.

5. The entitlement of the petitioner to an opportunity of personal hearing and to file a reply to the show cause notice, given that adjudication orders were passed ex-parte.

6. The consequences of the impugned adjudication order dated 20th August, 2024 confirming a demand of Rs. 95,95,823/- without the petitioner having filed any reply or appeared for personal hearing.

Issue-wise Detailed Analysis:

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

The impugned notifications purportedly extend the time limits for adjudication of show cause notices under the GST Act. Section 168A mandates that any extension of time limits requires prior recommendation by the GST Council. The petitioner challenged the notifications on the ground that the proper procedure was not followed, particularly for Notification No. 56/2023, where the extension was granted before ratification by the GST Council.

The Court noted that this issue has been extensively litigated in various High Courts, resulting in conflicting judgments. The Allahabad and Patna High Courts upheld the validity of the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court's observations on invalidity are under Supreme Court consideration in S.L.P No. 4240/2025.

The Supreme Court has issued notice and is poised to resolve the divergent views. The Punjab and Haryana High Court has refrained from expressing any opinion on the vires of Section 168A and the notifications, deferring to the Supreme Court's forthcoming decision. The present Court also acknowledged the pendency of the Supreme Court proceedings and accordingly refrained from adjudicating the validity of the impugned notifications.

This demonstrates the Court's adherence to judicial discipline and respect for the apex court's authority in resolving issues of constitutional and statutory interpretation involving GST procedural mandates.

2. Validity and Consequences of the Show Cause Notice and Adjudication Order

The petitioner had not filed any reply to the show cause notice dated 29th May, 2024. The adjudicating authority passed an order on 20th August, 2024 confirming a demand of Rs. 95,95,823/- based on the SCN, noting that neither the petitioner nor its authorized representative appeared for personal hearing, thereby resulting in an ex-parte order.

The Court observed that the petitioner had challenged the SCN along with the impugned notifications before any adjudication order was passed. Given the petitioner's inability to file a reply or appear for hearing at the relevant time, the Court considered it just and equitable to grant the petitioner an opportunity to file a reply and contest the matter on merits.

The Court set aside the impugned order dated 20th August, 2024 and directed the petitioner to file a reply by 10th July, 2025. Upon receipt of the reply, the adjudicating authority was directed to issue a notice for personal hearing and consider the petitioner's submissions before passing a fresh order.

This approach balances the principles of natural justice and procedural fairness, ensuring that the petitioner is not prejudiced by the absence of an opportunity to be heard, despite the pendency of the challenge to the notifications themselves.

3. Effect of Pending Supreme Court Proceedings and Interim Relief

The Court explicitly left open the question of the validity of the impugned notifications, emphasizing that any fresh order passed by the adjudicating authority pursuant to the petitioner's reply shall be subject to the outcome of the Supreme Court's decision in S.L.P No. 4240/2025.

The Court also ensured that the petitioner's rights and remedies remain open, including access to the GST Portal for uploading replies and accessing notices and related documents. This preserves procedural avenues for the petitioner while the substantive legal questions remain under adjudication at the highest judicial forum.

Treatment of Competing Arguments

While the petitioner challenged the notifications' validity and the SCN, the respondents defended the issuance of the notifications under Section 168A and the subsequent demand. The Court carefully navigated these competing contentions by recognizing the ongoing Supreme Court proceedings and the conflicting High Court decisions, thereby avoiding premature adjudication on the notifications' validity.

Regarding the ex-parte adjudication order, the Court prioritized procedural fairness over strict adherence to timelines, granting the petitioner an opportunity to be heard despite the delay and non-filing of reply. This approach respects the petitioner's substantive rights without undermining the statutory framework.

Significant Holdings

"The Court is of the opinion that since the Petitioner has been unable to file a reply as at the relevant point in time, the Petitioner had challenged the SCN itself along with the Notifications, one opportunity can be given to the Petitioner to file a reply and to contest the matter on merits."

"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."

"However, it is made clear that the issue in respect of the validity of the impugned notification is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court in S.L.P No 4240/2025."

Core principles established include the necessity of procedural fairness and opportunity to be heard even where statutory timelines have been extended by notifications whose validity is under judicial scrutiny, and the deference to the Supreme Court's pending adjudication on the constitutional validity of such notifications.

The final determination on each issue is that the Court refrains from deciding the validity of the impugned notifications, defers to the Supreme Court, and grants the petitioner an opportunity to file a reply and be heard on the SCN, setting aside the ex-parte order.

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