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2025 (5) TMI 1510 - HC - GSTChallenge to SCN and impugned order - challenge to N/N. 09/2023-State Tax dated 22nd June 2023 - HELD THAT - The impugned notification was under consideration before this Court in a batch of matters with the lead matter being DJST Traders Pvt. Ltd. vs. Union of India and Ors. 2025 (5) TMI 43 - DELHI HIGH COURT In the said batch of petitions on 22nd April 2025 the parties were heard at length qua the validity of the impugned notification and accordingly held that Broadly there are six categories of cases which are pending before this Court. While the issue concerning the validity of the impugned notifications is presently under consideration before the Supreme Court this Court is of the prima facie view that depending upon the categories of petitions orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases proceedings including appellate remedies may be permitted to be pursued by the Petitioners without delving into the question of the validity of the said notifications at this stage. Subsequently this Court having noted that the validity of the central notifications Notification Nos. 56/2023-CT and 09/2023-CT is presently under consideration before the Hon ble Supreme Court in M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax Ors. 2025 (1) TMI 299 - TELANGANA HIGH COURT had disposed of matters wherein challenge was limited to the central notifications after addressing other factual issues raised in the respective petitions with a direction that such matters would remain subject to the outcome of the proceedings before the Supreme Court. However in cases where the challenge is to the parallel State Notifications the same have been retained for consideration by this Court. Further on facts it is noticed that the Show Cause Notice was duly replied to by the Petitioner on 20th February 2024. Repeated personal hearings were granted to the Petitioner on 15th January 2024 22nd February 2024. The Petitioner had also attended second hearing based on which the impugned order has been passed on 10th March 2024 - Considering these circumstances the Court is of the opinion that the impugned order dated 10th March 2024 does not warrant interference. Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Validity of the Show Cause Notice and Adjudication Order under Section 73 of the DGST Act Legal Framework and Precedents: Section 73 of the DGST Act governs the determination of tax not paid or short paid. The issuance of a Show Cause Notice and the passing of an adjudication order must comply with procedural safeguards and statutory timelines. The Petitioner challenged the Show Cause Notice and the order on grounds including procedural irregularities and non-compliance with statutory provisions. Court's Interpretation and Reasoning: The Court noted that the Petitioner had duly replied to the Show Cause Notice on 20th February 2024 and was granted multiple personal hearings on 15th January 2024 and 22nd February 2024. The Petitioner attended the hearings, and the adjudicating authority passed the impugned order on 10th March 2024. Key Evidence and Findings: The record showed compliance with procedural requirements, including issuance of notices, opportunity to be heard, and reply submissions. The Court found no ground to interfere with the impugned order on these facts. Application of Law to Facts: Given the procedural compliance and opportunity afforded, the Court held that the adjudication order did not warrant interference. Treatment of Competing Arguments: While the Petitioner raised concerns about ex-parte orders in other cases and inability to avail personal hearings, in the present case, the Court found that adequate opportunities were provided. Conclusion: The impugned order dated 10th March 2024 was upheld, subject to appellate remedies. Validity and Viability of Notification No. 09/2023-State Tax and Related Notifications Legal Framework and Precedents: Notifications under Sections 168 and 168A of the CGST Act empower the government to extend limitation periods for adjudication and recovery of tax. However, Section 168A mandates prior recommendation by the GST Council before issuance of such notifications. The Petitioner challenged the impugned notification on grounds of procedural non-compliance and invalidity. Court's Interpretation and Reasoning: The Court considered the ongoing judicial landscape, noting conflicting High Court decisions regarding the validity of Notifications Nos. 9 and 56 of 2023 (Central Tax). The Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court's observations on invalidity were under Supreme Court consideration in SLP No. 4240/2025. Key Evidence and Findings: The Supreme Court had issued notices on the SLP and recognized the cleavage of opinion among High Courts. The Punjab and Haryana High Court refrained from expressing views on the vires of Section 168A and the notifications, deferring to the Supreme Court's forthcoming decision. Application of Law to Facts: The Court acknowledged that the issue of validity of the impugned notifications is sub judice before the Supreme Court. Hence, the Court refrained from adjudicating on the vires of the notifications in the present petition. Treatment of Competing Arguments: The Court noted submissions from counsel seeking interim relief due to procedural hardships faced by petitioners, including inability to file replies or attend hearings, resulting in ex-parte orders and penalties. However, the Court distinguished these from the present petition facts and focused on the legal validity of the notifications. Conclusion: The Court left open the question of the validity of the impugned notification, subject to the Supreme Court's decision in the pending SLP and related matters. Effect of Conflicting High Court Decisions and Pending Supreme Court Proceedings Legal Framework and Precedents: Judicial discipline requires lower courts to follow binding precedent and defer to higher courts where matters are sub judice. Conflicting High Court decisions create uncertainty, which the Supreme Court resolves. Court's Interpretation and Reasoning: The Court observed that multiple High Courts have taken divergent views on the validity of the notifications extending limitation periods under Section 168A of the GST Act. The Supreme Court's intervention in SLP No. 4240/2025 is awaited to resolve these conflicts. Key Evidence and Findings: The Court relied on orders from Punjab and Haryana High Court and Supreme Court's notice and interim orders in the SLP to justify restraint from deciding on the validity of the notifications. Application of Law to Facts: The Court disposed of petitions limited to challenges against central notifications with directions that such matters remain subject to the Supreme Court's outcome. Cases challenging state notifications were retained for consideration. Treatment of Competing Arguments: The Court balanced the need for judicial discipline with the petitioners' interests by allowing appeals and procedural opportunities without prejudging the validity of notifications. Conclusion: The Court deferred the final determination on the validity of the impugned notifications to the Supreme Court and retained jurisdiction over state notification challenges. Procedural Fairness and Appellate Remedies Legal Framework and Precedents: Section 107 of the DGST Act provides for appeals against orders passed under the Act. Timely filing of appeals and pre-deposit conditions are critical but can be relaxed in appropriate cases. Court's Interpretation and Reasoning: The Court noted that the Petitioner had filed replies and attended hearings, and was granted liberty to file an appeal within two months along with pre-deposit. It was clarified that such appeals would not be dismissed on limitation grounds and would be heard on merits. Key Evidence and Findings: The Court emphasized procedural compliance by the Petitioner and the availability of appellate remedies as a safeguard against any possible error in the adjudication. Application of Law to Facts: The Court's directions ensure that the Petitioner's rights are protected pending final adjudication, especially given the ongoing challenges to the notifications' validity. Treatment of Competing Arguments: While petitioners in other cases complained of lack of opportunity, the Court distinguished the present case facts and provided a balanced approach. Conclusion: The Court upheld the impugned order with liberty to appeal, ensuring procedural fairness. Access to GST Portal and Related Documents Legal Framework and Precedents: Transparency and access to relevant documents are essential for fair adjudication under tax laws. Court's Interpretation and Reasoning: The Court directed that if access to the GST Portal was not already available to the Petitioner, such access must be ensured to enable review of notices and related documents. Key Evidence and Findings: This direction was to facilitate effective participation in proceedings and appeals. Application of Law to Facts: Ensuring access safeguards the Petitioner's right to be heard and to prepare a defense. Conclusion: The Court mandated provision of GST Portal access to the Petitioner. 3. SIGNIFICANT HOLDINGS "The impugned order dated 10th March, 2024 does not warrant interference." "The appeal shall not be dismissed on the ground of limitation and shall be heard on merits." "The issue in respect of the validity of the impugned notification is left open and the order of the appellate authority shall be subject to the outcome of the decision of the Supreme Court and this Court." "Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable access to the notices and related documents." The Court established the principle that while procedural compliance in adjudication under the DGST Act is critical and orders passed with opportunity to be heard will not be lightly interfered with, the validity of notifications extending limitation periods under Section 168A of the GST Act remains a substantial legal question pending before the Supreme Court. Until the Supreme Court pronounces, lower courts should exercise restraint in adjudicating the validity of such notifications and allow appeals and procedural safeguards to protect the parties' rights. The Court's final determinations are:
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