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2025 (5) TMI 1212 - HC - GSTExtension of time limit of issuance of SCN u/s 73 / 74 - Violation of the principles of natural justice - validity and vires of Notification Nos. 56/2023-Central Tax 9/2023-Central Tax 56/2023-State Tax and 9/2023-State Tax - procedural requirements under Section 168A for prior to the issuance of notifications - No opportunity to file a reply to the SCN - Challenging the SCN and impugned order - HELD THAT - This Court is of the opinion that since the Petitioner has not been afforded an opportunity to file a reply and to be heard and the consequent impugned order have been passed without hearing the Petitioner an opportunity ought to be afforded to the Petitioner 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 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.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
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 Central Government, on recommendation of the GST Council, to extend the time limits for adjudication of show cause notices and passing of orders under Sections 73 and 74 of the GST Act. The notifications challenged purportedly extend deadlines for the financial year 2019-20. Several High Courts have delivered conflicting judgments on the validity of these notifications. The Allahabad High Court upheld Notification No. 9/2023 (Central Tax), while the Patna High Court upheld Notification No. 56/2023 (Central Tax). Conversely, the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court expressed doubts on the validity of Notification No. 56/2023 (Central Tax) but did not conclusively decide the issue. This cleavage of opinion led to the Supreme Court entertaining Special Leave Petitions (SLPs) for final adjudication. Court's interpretation and reasoning: The Delhi High Court acknowledged the divergent views and ongoing litigation in various jurisdictions, including the pending Supreme Court proceedings (SLP No. 4240/2025). The Court noted that the impugned notifications' validity was squarely before the Supreme Court and hence refrained from expressing any definitive opinion on this issue, deferring to the apex court's ultimate determination. Application of law to facts: The Court observed that the impugned notifications were issued without uniform compliance with the procedural mandate under Section 168A, particularly concerning the timing and ratification by the GST Council. The notifications' issuance after the expiry of limitation periods was also questioned. Treatment of competing arguments: The Court considered submissions from various parties, including the Government and petitioners, and noted that while some notifications had been upheld by certain High Courts, others had been struck down. The Court also noted that the Supreme Court had issued notices and interim orders, indicating the complexity and importance of the issue. Conclusion: The Court held that the question of validity of the impugned notifications is pending before the Supreme Court and must be left open for final adjudication. The Court aligned with the principle of judicial discipline, refraining from conflicting with the Supreme Court's pending decision. Procedural Fairness and Natural Justice in Passing of the Impugned Order Relevant legal framework and precedents: The principles of natural justice require that a party be given a fair opportunity to be heard before adverse orders are passed. This includes the right to file a reply to show cause notices and to participate in personal hearings. Court's interpretation and reasoning: The Court examined the impugned order passed by the Sales Tax Officer, which noted that no reply was filed by the Petitioner and no authorized representative appeared for personal hearing. The order concluded that the taxpayer had "nothing to say" and proceeded to create a demand. The Court found this approach to be violative of the principles of natural justice, as the Petitioner was not afforded an opportunity to file any reply or to be heard before the order was passed. The order was described as nonspeaking, cryptic, and vague, lacking adequate reasoning and failing to consider the Petitioner's standpoint. Key evidence and findings: The record showed absence of any reply or representation from the Petitioner during the adjudication process. The Court noted the Petitioner's submission that it was unable to file replies or attend hearings due to various reasons, resulting in ex-parte orders and imposition of demands and penalties. Application of law to facts: Applying the principles of natural justice, the Court concluded that the impugned order could not stand as it was passed without affording the Petitioner a fair opportunity to contest the allegations and present its case. Treatment of competing arguments: While the Department argued that the absence of reply or appearance justified the order, the Court emphasized that procedural fairness cannot be dispensed with, especially in revenue matters involving substantial demands and penalties. Conclusion: The Court set aside the impugned order and directed that the Petitioner be given an opportunity to file a reply to the show cause notice by 10th July 2025, followed by issuance of a notice for personal hearing. The adjudicating authority was mandated to consider the Petitioner's submissions and pass a fresh order. Effect of Pending Supreme Court Proceedings and Interim Orders Relevant legal framework and precedents: The doctrine of judicial discipline and respect for hierarchical adjudication mandates that lower courts and tribunals refrain from deciding issues pending before higher courts, especially the Supreme Court. Court's interpretation and reasoning: The Court observed that the Supreme Court was seized of the matter regarding the validity of the impugned notifications and had issued notices and interim orders. Other High Courts had also disposed of similar petitions subject to the Supreme Court's final decision. Application of law to facts: The Court disposed of the writ petition with liberty to the parties to pursue their remedies and expressly left open the question of validity of the impugned notifications pending the Supreme Court's decision. It also directed that any orders passed by the adjudicating authority shall be subject to the outcome of the Supreme Court proceedings. Treatment of competing arguments: The Court balanced the need to protect the Petitioner's rights to be heard while respecting the ongoing higher court proceedings on the notifications' validity. Conclusion: The Court's order preserves all rights and remedies of the parties and ensures that the adjudication process proceeds without prejudice to the ultimate determination of the notifications' validity by the Supreme Court. 3. SIGNIFICANT HOLDINGS "Since the Petitioner has not been afforded an opportunity to file a reply and to be heard and the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner 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." "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 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. and of this Court in W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India & Ors." Core principles established include:
Final determinations:
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