2025 (5) TMI 1258 - HC - GST

Extension of time limit of issuance of SCN u/s 73 / 74 - Validity of Notification No. 9/2023-Central Tax - procedural requirements under Section 168A for prior to the issuance of notifications - cancellation of the registration with retrospective effect - reply filed by the Petitioner to the SCN not considered - Challenging the SCN and impugned order - HELD THAT - This Court is of the opinion that the same does not merit any interference of this Court and a challenge if any shall be taken up by the Petitioner before the appellate authority in appeal. Accordingly the Petitioner is granted time till 10th July 2025 to file an appeal before the appellate authority under Section 107 of the Central Goods and Service Tax Act 2017. It is also made clear that the observations made by this Court in the present petition shall have no bearing upon the decision of the appellate authority. 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 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 . The present petition is disposed of in said terms. Pending applications if any stand disposed of.

Summary

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

1. Whether the show cause notice dated 28th May, 2024 and the consequent adjudication order dated 28th August, 2024 passed by the Sales Tax Officer are valid and sustainable.

2. The vires and validity of Notification No. 9/2023-Central Tax dated 31st March, 2023 (the impugned notification), particularly regarding the extension of time limits for adjudication under the Central Goods and Services Tax Act, 2017 (hereinafter "the GST Act").

3. The procedural compliance requirements under Section 168A of the GST Act for issuance of such notifications extending limitation periods.

4. The impact of the pending Supreme Court proceedings on the validity of the impugned notification and the consequential orders passed by the adjudicating authorities.

5. The relief available to petitioners who have been unable to file replies or avail personal hearings, resulting in ex-parte orders and imposition of large demands and penalties.

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice and Adjudication Order

Legal Framework and Precedents: The adjudication under Section 73 of the GST Act requires that the show cause notice be issued within the prescribed limitation period, and the reply of the petitioner must be duly considered before passing any order. The petitioner challenged the impugned order on the ground that it was passed without considering the reply filed and was based solely on retrospective cancellation of registration of supplying dealers.

Court's Reasoning and Findings: The Court examined the impugned order and found it to be detailed and to have considered the petitioner's reply along with supporting documents. The Court rejected the contention that the order was passed ex-parte or without due consideration.

Application of Law to Facts: Since the order was passed after considering the petitioner's submissions, the Court held that the order did not merit interference at this stage and that the remedy lay in filing an appeal before the appellate authority.

Treatment of Competing Arguments: The petitioner's plea of non-consideration of reply was negatived by the Court based on the record. The Court emphasized the availability of appellate remedy.

Conclusion: The Court declined to interfere with the impugned order and granted the petitioner time to file an appeal under Section 107 of the GST Act.

2. Validity of Notification No. 9/2023-Central Tax and Extension of Time Limits under Section 168A of the GST Act

Legal Framework: Section 168A of the GST Act empowers the government to extend the time limit for issuance of show cause notices and passing of orders. Such extension requires prior recommendation of the GST Council. The impugned notification purportedly extended limitation periods for the financial year 2019-20.

Precedents and Judicial Opinions: Various High Courts have taken divergent views on the validity of the impugned notification and similar notifications. The Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 of 2023 (Central Tax), while the Guwahati High Court quashed Notification No. 56 of 2023 (Central Tax). The Telangana High Court expressed reservations regarding Notification No. 56 without deciding on its vires.

Pending Supreme Court Proceedings: The Supreme Court has admitted a Special Leave Petition (SLP No. 4240/2025) concerning the validity of these notifications and has issued notices to the parties. The Supreme Court's order recognizes the cleavage of opinion among High Courts and has stayed further adjudications pending its decision.

Court's Interpretation and Reasoning: The Court noted the conflicting judicial opinions and observed that the issue is squarely pending before the Supreme Court. The Court refrained from expressing any opinion on the validity of the impugned notification, deferring to the Supreme Court's final adjudication.

Application of Law to Facts: The Court acknowledged that the impugned notification's validity is a threshold question affecting limitation and jurisdiction but held that the petitioner's challenge to the adjudication order could be pursued independently before the appellate authority.

Treatment of Competing Arguments: While the petitioner challenged the notification's validity, the Court recognized that even if the notification is upheld, procedural fairness must be ensured in adjudication. The Court balanced the interests by allowing appeals without limitation bar, subject to the Supreme Court's final ruling.

Conclusion: The Court left the question of the notification's validity open and linked any order of the appellate authority to the Supreme Court's eventual decision.

3. Procedural Compliance and Fairness in Adjudication

Legal Framework: Principles of natural justice require that a show cause notice be replied to and that the reply be considered before passing any order. The petitioner contended that due to inability to avail personal hearings and file replies, orders were passed ex-parte, resulting in large demands and penalties.

Court's Reasoning: The Court recognized the petitioner's grievance but found the impugned order in the present case to have considered the reply. It proposed that in other cases, depending on the category of petitions, appropriate relief could be granted to afford an opportunity to place their stand before the adjudicating authority.

Application of Law to Facts: The Court categorized pending petitions and suggested that procedural fairness be ensured, and appeals be permitted without limitation bar where appropriate.

Conclusion: The Court emphasized the need for opportunity and fairness in adjudication and allowed time for filing appeals with pre-deposit, ensuring that appeals would be heard on merits.

4. Impact of Pending Supreme Court Proceedings on Adjudication and Appeals

Legal Framework: The Supreme Court's order in SLP No. 4240/2025 stays or governs the adjudication of matters relating to the validity of the impugned notifications.

Court's Reasoning: The Court noted that other High Courts have refrained from deciding on the validity of Section 168A and related notifications pending the Supreme Court's decision, respecting judicial discipline and precedent.

Application of Law to Facts: The Court disposed of the present petition subject to the outcome of the Supreme Court proceedings and clarified that the appellate authority's orders shall be subject to the Supreme Court's final decision.

Conclusion: The Court ensured that the ongoing Supreme Court proceedings would have binding effect on the present matter and that interim reliefs or orders would be governed accordingly.

Significant Holdings:

"The impugned order is detailed in nature and has been passed after duly considering the reply of the Petitioner along with the supporting documents filed."

"A challenge, if any, shall be taken up by the Petitioner before the appellate authority in appeal."

"If the appeal is filed by the Petitioner before 10th July, 2025, along with the mandatory pre-deposit, the same shall be adjudicated upon on merits and shall not be dismissed on the ground of limitation."

"The observations made by this Court in the present petition shall have no bearing upon the decision of the appellate authority."

"The issue in respect of the validity of the impugned notification is left open. Any order passed by the appellate 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 considering replies before passing orders, the availability of appellate remedy notwithstanding pending challenges to notifications, and respect for the Supreme Court's jurisdiction in resolving conflicting High Court decisions on statutory validity.

Final determinations are that the impugned adjudication order will not be interfered with by the High Court at this stage, appeals are permitted with extended limitation, and the validity of the impugned notification remains undecided pending Supreme Court adjudication.