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2025 (5) TMI 1349 - HC - GSTChallenge to SCN and consequent demand order - challenge to N/N. 9/2023-Central Tax dated 31st March 2023 - extension of time limits for adjudication - HELD THAT - This Court in Neelgiri Machinery through its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others 2025 (3) TMI 1308 - DELHI HIGH COURT under similar circumstances where the SCN was uploaded on Additional Notices Tab had remanded the matter. 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 notification. 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. The impugned order is set aside - petition disposed off by way of remand.
The core legal questions considered in this judgment include:
1. Whether the show cause notice (SCN) dated 14th May 2024 and the consequent adjudication order dated 6th August 2024, issued under the Goods and Services Tax (GST) regime for the financial year 2019-20, were validly issued and adjudicated upon, particularly in light of procedural compliance and opportunity to be heard. 2. The vires (validity) of Notification No. 9/2023-Central Tax dated 31st March 2023 and related notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017, specifically concerning the extension of limitation periods for adjudication of SCNs. 3. Whether the procedural requirements under Section 168A of the GST Act, including the prior recommendation of the GST Council, were complied with in issuing the impugned notifications extending limitation periods. 4. The impact of the ongoing Supreme Court proceedings on the validity of the impugned notifications and the consequential orders passed by various High Courts on the subject. 5. Whether the Petitioner was afforded a fair opportunity to file replies and participate in personal hearings before the adjudicating authority, especially given the technical issue of SCNs being uploaded under the 'Additional Notices Tab' on the GST portal, which allegedly impeded effective notice. 6. The appropriate relief and procedural directions to be granted to the Petitioner in light of the above issues, pending final adjudication by the Supreme Court. Issue-wise Detailed Analysis: 1. Validity of Show Cause Notice and Adjudication Order Legal Framework and Precedents: The issuance of SCNs and adjudication under the GST Act is governed by procedural fairness principles, including the right to be heard and proper service of notices. The GST portal's mechanism for issuing notices is critical for ensuring compliance with these principles. Previous judgments by this Court and others (e.g., Satish Chand Mittal, Anant Wire Industries) have emphasized that orders should not be passed ex-parte without affording the party an opportunity to respond. Court's Reasoning and Findings: The Petitioner contended that the SCN was uploaded under the 'Additional Notices Tab' on the GST portal, which was not sufficiently visible or accessible, resulting in no knowledge of the notice and hence no reply filed. The Court noted that after 16th January 2024, the Department had rectified the portal issue by making the 'Additional Notices & Orders' tab more visible. However, in the present case, the SCN issued on 14th May 2024 was still not effectively brought to the Petitioner's notice. The Court referred to its earlier decisions where similar procedural lapses led to remand of matters to ensure fair opportunity. It held that since the Petitioner did not get a proper opportunity to be heard, the impugned order was liable to be set aside and remanded for fresh adjudication. Application of Law to Facts: The Court applied the principle of audi alteram partem (right to be heard), emphasizing that technical glitches or procedural lacunae in notice issuance vitiate the adjudication process. The Petitioner was entitled to file a reply and be heard before any order was passed. Treatment of Competing Arguments: The Respondent-Department argued that the portal issue had been rectified and notices were properly issued post-rectification. The Court acknowledged this but found that in the present case, the Petitioner was still prejudiced due to non-visibility of the SCN, warranting remedial action. Conclusion: The impugned adjudication order dated 6th August 2024 was set aside. The Petitioner was granted time to file replies and afforded personal hearings, with directions for improved communication (including email and mobile notifications) to ensure effective notice. 2. Validity of Notification No. 9/2023-Central Tax and Related Notifications Legal Framework and Precedents: Section 168A of the Central Goods and Services Tax Act, 2017 mandates that any extension of limitation periods for adjudication of SCNs must be preceded by a recommendation of the GST Council. The notifications challenged purported to extend limitation periods for financial year 2019-20. Several High Courts have taken divergent views on the validity of these notifications. The Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56 of 2023 (Central Tax). The Telangana High Court made observations regarding invalidity, which are under Supreme Court consideration in SLP No. 4240/2025. Court's Interpretation and Reasoning: This Court noted the ongoing litigation in the Supreme Court on the issue and the conflicting High Court decisions. It observed that the validity of the impugned notifications was a substantial legal question requiring authoritative resolution by the Supreme Court. Application of Law to Facts: Given the pendency of the Supreme Court proceedings and the judicial discipline required, this Court refrained from expressing any opinion on the validity of the notifications. It disposed of connected petitions with the direction that the outcome of the Supreme Court's decision would be binding. Treatment of Competing Arguments: The Petitioner challenged the notifications on procedural grounds (lack of proper GST Council recommendation before issuance). The Respondents relied on the notifications' purported compliance and prior recommendations. The Court deferred the issue pending Supreme Court adjudication. Conclusion: The Court left the question of validity of the impugned notifications open, subject to the Supreme Court's final decision. 3. Procedural Compliance and Opportunity to be Heard Legal Framework: Principles of natural justice require that a party must be given adequate notice and opportunity to respond to allegations before adverse orders are passed. The GST portal's notice issuance mechanism must ensure effective communication. Court's Reasoning: The Court emphasized that mere uploading of notices on an obscure or less visible tab on the GST portal does not satisfy the requirement of proper service. It noted that in earlier cases, the Court had remanded matters for fresh adjudication where notices were not properly communicated. Application to Facts: The Petitioner had not received effective notice of the SCN and thus was deprived of the opportunity to file replies or appear for personal hearings. The Court directed that future hearing notices be communicated via email and mobile in addition to portal upload. Treatment of Competing Arguments: The Department contended that portal issues were rectified and notices were validly issued. The Court found that despite rectification, the Petitioner was prejudiced and required remedial directions. Conclusion: The Court ordered remand for fresh adjudication after providing the Petitioner an opportunity to file replies and be heard, with enhanced communication protocols. 4. Impact of Pending Supreme Court Proceedings Legal Framework: Judicial discipline requires lower courts to refrain from deciding issues pending before the Supreme Court, especially where there is a division of opinion among High Courts. Court's Reasoning: The Court acknowledged the pendency of SLP No. 4240/2025 before the Supreme Court concerning the validity of the impugned notifications and noted the conflicting High Court rulings. Application to Facts: The Court disposed of connected petitions with a direction that the outcome of the Supreme Court proceedings would be binding and that interim orders would continue to operate. Conclusion: The Court refrained from expressing any opinion on the validity of the notifications and left the issue open pending the Supreme Court's decision. 5. Categories of Petitions and Reliefs The Court identified six broad categories of cases pending before it, involving challenges to the notifications and related adjudications. While the validity of the notifications was under Supreme Court consideration, the Court indicated that relief could be granted in some cases by allowing parties to file replies and pursue appellate remedies without delving into the validity issue at this stage. The Court proposed and ultimately granted relief by remanding the matter for fresh adjudication with directions for effective notice and opportunity to be heard. Significant Holdings: "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." "Since there is no clarity on behalf of the Department, this Court follows the order dated 9th September, 2024 in Satish Chand Mittal (Trade Name National Rubber Products) vs. Sales Tax Officer SGST, Ward 25-Zone 1 as also order dated 23rd December, 2024 in Anant Wire Industries vs. Sales Tax Officers Class II/Avato, Ward 83 & Anr where the Court under similar circumstances has remanded back the matter to ensure the Noticee/Petitioners get a fair opportunity to be heard." "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 paramount importance of the right to be heard in adjudicatory proceedings under the GST regime and that procedural deficiencies, including ineffective notice due to technical or administrative lapses, vitiate orders passed in default. The Court also underscored the necessity of judicial discipline by deferring to the Supreme Court on the substantial question of law regarding the validity of extension notifications under Section 168A of the GST Act. Final determinations on each issue are:
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