2025 (5) TMI 1513 - HC - GST

Challenge to SCN and consequent demand order - challenge to N/N. 9/2023-Central Tax dated 31st March 2023 and N/N. 56/2023-Central Tax dated 28th December 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. It is relevant to note that post 16th January 2024 the GST Department has effected changes in the portal to ensure that the Show Cause Notices become visible to parties - In the present case the GST registration of the Petitioner is stated to have been surrendered since 1st February 2022 hence the reply could not be filed - Considering the fact that the Petitioner did not have a proper opportunity to file a reply or to be heard in the opinion of the Court 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.

Summary

The core legal questions considered in this judgment include:

(i) The validity and vires of certain notifications issued under the Central Goods and Services Tax Act, 2017 (hereinafter "GST Act"), specifically Notification Nos. 9/2023-Central Tax, 56/2023-Central Tax, and 56/2023-State Tax;

(ii) Whether the proper statutory procedure, including prior recommendation of the GST Council as mandated under Section 168A of the GST Act, was followed in issuing these notifications extending deadlines for adjudication;

(iii) The legality of extending the time limit for adjudication of show cause notices and passing orders under Section 73 of the GST Act and corresponding State GST Acts through such notifications;

(iv) The procedural fairness and principles of natural justice in passing adjudication orders ex-parte without providing adequate notice and opportunity for personal hearing to the petitioner;

(v) The adequacy and accessibility of communication of show cause notices and hearing notices to the petitioner, especially when such notices are uploaded only under the 'Additional Notices' tab on the GST portal;

(vi) The consequences of the petitioner's GST registration being surrendered prior to issuance of notices and its impact on the ability to file replies;

(vii) The interplay and binding effect of interim orders and pending Supreme Court proceedings on the adjudication of these matters before the High Court.

Issue-wise detailed analysis:

Validity of Notifications under Section 168A of the GST Act

The notifications challenged purportedly extended the limitation period for adjudication of show cause notices under the GST Act. Section 168A mandates that any extension of time limits must be preceded by a recommendation of the GST Council. The Court examined whether such procedure was complied with.

Relevant precedents and legal framework include the GST Act, particularly Section 168A, and various High Court decisions on the validity of these notifications. The Court noted conflicting views from different High Courts: the Allahabad and Patna High Courts upheld the notifications, while the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court's observations on invalidity are under Supreme Court review in S.L.P No. 4240/2025.

The Supreme Court has issued notices and interim orders in the said SLP, acknowledging the cleavage of opinion and the complex issues involved. The Punjab and Haryana High Court, respecting judicial discipline, refrained from deciding on the vires of Section 168A and related notifications, deferring to the Supreme Court's eventual ruling.

The Court in the present case recognized that the validity of the impugned notifications is squarely pending before the Supreme Court and accordingly refrained from expressing any opinion on the same. It held that the outcome of the Supreme Court proceedings would be binding on all connected cases.

Procedural Fairness in Adjudication and Communication of Notices

The petitioner contended that the show cause notice was uploaded only under the 'Additional Notices' tab on the GST portal, which did not come to their knowledge, resulting in no opportunity to file replies or appear for personal hearings. The impugned orders were passed ex-parte, imposing huge demands and penalties without affording natural justice.

The Court relied on its own earlier decisions and those of coordinate benches, which had remanded similar matters for fresh adjudication after ensuring proper notice and opportunity to be heard. Specifically, the Court referred to judgments where uploading notices solely under 'Additional Notices' was held inadequate, and directions were issued to make such notices more accessible and to provide personal hearings.

Applying these principles, the Court set aside the impugned demand orders and directed that the petitioner be allowed to file replies within a stipulated time frame. It further mandated that hearing notices should not only be uploaded on the portal but also emailed to the petitioner to ensure actual receipt and opportunity to appear and make submissions.

The Court noted that post-January 2024, the GST Department had made portal changes to improve visibility of notices, reflecting an evolving procedural standard to safeguard natural justice.

Impact of Surrendered GST Registration

The petitioner's GST registration had been surrendered since February 2022, which was cited as a reason for the inability to file replies. The Court acknowledged this fact but emphasized that despite surrender, the petitioner must be given a proper opportunity to respond and be heard. Access to the GST portal and relevant documents must be ensured to enable this process.

Interim Orders and Pending Supreme Court Proceedings

The Court noted that several High Courts had passed interim orders in connected cases, and the Supreme Court's pending SLP was the authoritative forum to decide the validity of the notifications and related issues. Respecting judicial discipline, the Court declined to decide on these questions but kept the issue open for final adjudication by the Supreme Court.

Meanwhile, the Court focused on ensuring procedural fairness in ongoing adjudications without prejudging the validity of the notifications, thus balancing the rights of the parties with the need for judicial restraint pending higher adjudication.

Conclusions

The Court concluded that while the validity of the impugned notifications remains an open question pending Supreme Court decision, the petitioner's right to be heard and to respond to show cause notices must be protected. The impugned orders passed ex-parte without proper notice and hearing were set aside, and the matter was remanded for fresh adjudication after affording adequate opportunity and communication safeguards.

The petitioner was permitted to file replies by a specified date, and personal hearings were to be conducted with notices sent by email and uploaded on the portal. The Court also directed that access to the GST portal be ensured for the petitioner to facilitate compliance.

Significant holdings and core principles established include:

"The validity of the impugned notifications is left open and 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."

"The impugned demand orders dated 23rd April, 2024 and 5th December, 2023 are accordingly set aside."

"The hearing notices shall now not be merely uploaded on the portal but shall also be e-mailed to the Petitioner and upon the hearing notice being received, the Petitioner would appear before the Department and make its submissions."

"Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable filing of reply as also access to the notices and related documents."

"Considering the fact that the Petitioner did not have a proper opportunity to file a reply or to be heard, in the opinion of the Court, the matter deserves to be remanded back to the concerned Adjudicating Authority."

In sum, the Court emphasized the paramount importance of procedural fairness and natural justice in GST adjudications, especially where notices are served electronically, and underscored the binding nature of the Supreme Court's forthcoming ruling on the validity of the notifications extending limitation periods under the GST Act.