2025 (5) TMI 1267 - HC - GST

Challenge to SCN and consequent orders - challenge to N/N. 09/2023-Central Tax dated 31st March 2023 and 56/2023-Central Tax dated 28th December 2023 - extension of time limit for adjudication of show cause notices and passing of order - HELD THAT - Upon considering the impugned order it is seen that the Adjudicating Authority observed that the reply was incomplete and no supporting documents are attached. Accordingly 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. 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. Petition disposed off.

Summary

The core legal questions considered by the Court include:

1. Whether the show cause notice dated 27th May 2024 and the consequent order dated 28th August 2024 passed by the Sales Tax Officer are valid and sustainable.

2. The vires and validity of Notification Nos. 9/2023 and 56/2023 issued under the Central and State Goods and Services Tax Acts, specifically concerning the extension of time limits for adjudication under Section 168A of the CGST Act, 2017.

3. Whether the procedural requirements, including prior recommendation of the GST Council, were complied with prior to issuance of the impugned notifications.

4. The impact of ongoing proceedings before the Supreme Court and other High Courts on the adjudication of the present petition.

5. The procedural fairness in the adjudication process, especially in light of the Petitioner's claim of inability to file replies or avail personal hearings, leading to ex-parte orders and imposition of penalties.

6. The scope of relief that can be granted to Petitioners pending final adjudication on the validity of the impugned notifications and orders.

Issue-wise Detailed Analysis

Validity of the Impugned Notifications (Nos. 9/2023 and 56/2023 - Central and State Tax)

The legal framework centers on Section 168A of the Central Goods and Services Tax Act, 2017, which mandates that any extension of time limits for adjudication of show cause notices and passing of orders requires prior recommendation of the GST Council.

The Court noted a divergence in judicial opinion across various High Courts: the Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 respectively, whereas the Guwahati High Court quashed Notification No. 56 (Central Tax). The Telangana High Court's observations on the invalidity of Notification No. 56 (Central Tax) are presently under Supreme Court consideration in SLP No. 4240/2025.

The Supreme Court has issued notices and interim orders in this matter, acknowledging the cleavage of opinion and the complexity of the issues involved. The Punjab and Haryana High Court has refrained from expressing any opinion, deferring to the Supreme Court's forthcoming judgment.

The Court emphasized that the validity of the impugned notifications is a substantial legal question pending before the Supreme Court and therefore, the present Court refrains from deciding on this issue conclusively. Instead, it has disposed of several petitions subject to the outcome of the Supreme Court's decision.

Procedural Compliance and Fairness in Adjudication

The Petitioner challenged the show cause notice and the consequent order, alleging that no personal hearing was granted and that replies were filed but not adequately considered, resulting in ex-parte adjudication and imposition of substantial tax demands and penalties.

The impugned order reveals that the adjudicating authority found the Petitioner's reply incomplete and lacking supporting documents, which led to confirmation of the demand. The Court, upon review, opined that the adjudicating authority's conclusion that the reply was incomplete does not warrant interference at this stage.

However, the Court granted the Petitioner an opportunity to file an appeal before the appellate authority under Section 107 of the CGST Act, 2017, with a timeline until 10th July 2025. The Court directed that if the appeal is filed within this period along with the mandatory pre-deposit, it shall be adjudicated on merits and shall not be dismissed on the ground of limitation.

The Court clarified that its observations in the present petition shall not prejudice the appellate authority's decision, which must be independent and on merits.

Impact of Pending Supreme Court Proceedings

The Court recognized that the core issue of the validity of the impugned notifications is pending before the Supreme Court. It accordingly held that any order passed by the appellate authority shall be subject to the outcome of the Supreme Court's decision in SLP No. 4240/2025 and the decision of this Court in related matters concerning parallel State notifications.

Thus, the Court maintained judicial discipline by deferring to the Supreme Court on the substantive legal questions, while allowing procedural remedies to proceed to avoid prejudice to the Petitioners.

Categories of Petitions and Relief Framework

The Court identified six broad categories of cases pending before it, indicating that while the validity of the impugned notifications is under Supreme Court consideration, it may be appropriate to pass orders affording Petitioners an opportunity to present their case before the adjudicating authority. In some instances, appellate remedies may be permitted without delving into the validity of the notifications at this stage.

This approach balances the need to respect the higher judicial authority's pending decision with the Petitioners' right to be heard and to seek redressal against potentially ex-parte orders.

Conclusions

The Court concluded that:

• The validity of the impugned notifications is a substantial legal question pending before the Supreme Court and is not to be decided at this stage by the High Court.
• The adjudicating authority's order confirming the demand on the ground of incomplete replies does not warrant interference by the High Court.
• The Petitioner is entitled to file an appeal before the appellate authority within a specified timeframe, which shall be heard on merits and not dismissed on limitation grounds.
• Any appellate order shall be subject to the final outcome of the Supreme Court's decision on the validity of the impugned notifications.

Significant Holdings

"The validity of the impugned notifications is under consideration before the Supreme Court and accordingly, the present petitions are disposed of subject to the outcome of the proceedings before the Supreme Court in S.L.P. No. 4240/2025."

"If the appeal is filed by the Petitioner before 10th July, 2025, along with the mandatory pre-deposit, the same shall be adjudicated upon 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."

"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 and of this Court in related matters."

Core principles established include the primacy of the Supreme Court's adjudication on the validity of statutory notifications, the necessity of adherence to procedural fairness in tax adjudication, and the safeguarding of Petitioners' rights to appeal and be heard despite ongoing legal uncertainties.