2025 (6) TMI 344 - HC - GST

Challenge to SCN and consequent order - vires of Notification No. 09/2023- Central Tax dated 31st March 2023 - HELD THAT - It is noticed that subsequent to the impugned SCN dated 23rd September 2023 three reminders dated 13th November 2023 22nd November 2023 and 21st February 2024 have also been issued. However all these reminders are uploaded on the Additional Notices Tab . 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 vide Additional Notices Tab had remanded the matter. It is relevant to note that post 16th January 2024 the Department has effected changes in the portal to ensure that the Show Cause Notices become visible to parties. However the impugned SCN and two out of three reminders in the present case are issued prior to 16th January 2024. Under these circumstances though one reminder has been issued post 16th January 2024 where the same could have been visible to the Petitioner 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 this Court is inclined to remand this matter back to the concerned Adjudicating Authority. The Petitioner is granted time till 15th July 2025 to file the reply to the impugned SCN. Upon filing of the reply the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner - The impugned order is set aside - petition disposed off.

Summary

The core legal questions considered by the Court include:

1. The validity and vires of Notification No. 09/2023-Central Tax dated 31st March, 2023, issued under Section 168A of the Central Goods and Services Tax Act, 2017 ("GST Act"), particularly whether the proper procedure including prior recommendation of the GST Council was followed.

2. 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 by means of the impugned notifications.

3. The procedural fairness in issuance and adjudication of the impugned Show Cause Notice (SCN) dated 23rd September, 2023, specifically whether the Petitioner was given adequate notice and opportunity to be heard, including the adequacy of communication of notices via the GST portal's 'Additional Notices Tab'.

4. The impact of pending Supreme Court proceedings on the adjudication of the present petition and the approach to be adopted by the High Court in light of conflicting High Court decisions on the validity of the impugned notifications.

Issue-Wise Detailed Analysis

1. Validity of Notification No. 09/2023-Central Tax and related notifications under Section 168A of the GST Act

The legal framework governing this issue is Section 168A of the GST Act, which empowers the government to extend the time limit for adjudication of show cause notices and related orders, subject to the prior recommendation of the GST Council. The petition challenged the validity of Notification No. 09/2023-Central Tax on the ground that the proper procedure was not followed.

The Court noted that this issue is currently sub judice before the Supreme Court in S.L.P No. 4240/2025, where a split of judicial opinion exists among various High Courts. The Allahabad and Patna High Courts have upheld the validity of similar notifications, whereas the Guwahati and Telangana High Courts have taken a contrary view. The Supreme Court has issued notice and is considering the matter, thereby creating a binding precedent once decided.

The Court referenced the Punjab and Haryana High Court's decision to refrain from expressing an opinion on the vires of Section 168A and the impugned notifications, deferring to the Supreme Court's decision as a matter of judicial discipline. This Court followed the same approach, recognizing the pending Supreme Court adjudication as determinative.

Thus, the Court left open the question of validity of the impugned notifications, expressly stating that any order passed by the adjudicating authority shall be subject to the Supreme Court's final decision.

2. Extension of time limits for adjudication under the impugned notifications

Closely related to the first issue, the question was whether the notifications validly extended the time limits for adjudication under Section 73 of the GST Act and corresponding State Acts. The Supreme Court's notice in the SLP specifically focuses on whether such extension could be effected by the impugned notifications.

The Court observed that this issue is intertwined with the validity of the notifications themselves and is therefore also pending before the Supreme Court. The Court refrained from deciding on this point and awaited the Supreme Court's ruling, consistent with the principle of judicial restraint and uniformity in tax law interpretation.

3. Procedural fairness and adequacy of notice in issuance and adjudication of the impugned SCN

The Petitioner contended that the impugned SCN dated 23rd September, 2023 was uploaded on the GST portal under the 'Additional Notices Tab', which did not bring the notice to the Petitioner's actual knowledge. Consequently, the Petitioner was unable to file replies or avail personal hearings, resulting in ex-parte adjudication and imposition of penalties.

The Court examined the procedural history and noted that three reminders were issued, but all were uploaded on the same 'Additional Notices Tab' prior to January 16, 2024, a date after which the Department made changes to the portal to improve visibility of such notices.

Relying on precedents from this Court, including W.P.(C) 13727/2024 and other similar cases, the Court emphasized the principle that orders should not be passed in default where the noticee has not had a fair opportunity to be heard. It cited prior decisions holding that mere uploading of notices in less visible tabs on the portal does not constitute adequate service.

The Court noted that the Department has since improved the portal interface, but the impugned SCN and most reminders predated this change, thereby prejudicing the Petitioner's right to be heard. The Court held that this procedural lapse warranted setting aside the impugned order and remanding the matter for fresh adjudication after affording the Petitioner a proper opportunity to file replies and appear for personal hearings.

The Court directed that henceforth, hearing notices must not only be uploaded on the portal but also communicated via email and mobile number, ensuring actual receipt and opportunity to be heard.

4. Impact of pending Supreme Court proceedings and approach to adjudication

The Court acknowledged the ongoing Supreme Court proceedings on the validity of the impugned notifications and the existence of conflicting High Court decisions. It noted that other High Courts, including Punjab and Haryana, have stayed their proceedings and disposed of petitions subject to the Supreme Court's final decision.

Accordingly, the Court disposed of the present petition with directions for fresh adjudication on procedural grounds without deciding on the validity of the notifications. It explicitly stated that all rights and remedies of the parties remain open and any order passed by the adjudicating authority will be subject to the Supreme Court's outcome in the pending SLP.

This approach balances the need for procedural fairness to the Petitioner with judicial discipline and respect for the apex court's jurisdiction on substantive legal questions.

Significant Holdings

"The validity of the impugned notifications 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."

"The impugned SCN dated 23rd September, 2023 and the consequent order dated 06th December, 2023 are set aside on the ground that the Petitioner was not given a fair opportunity to be heard as the notices were uploaded only under the 'Additional Notices Tab' and did not come to the knowledge of the Petitioner."

"The Petitioner shall be granted time till 15th July, 2025 to file reply to the impugned SCN. The Adjudicating Authority shall issue notice for personal hearing communicated via email and mobile, and consider the reply and submissions before passing a fresh order."

"Orders shall not be passed in default where there is no clarity on service of notices, and procedural fairness requires that the noticee be given an opportunity to file reply and be heard."

"Judicial discipline requires that the High Courts refrain from expressing opinions on issues pending before the Supreme Court and that decisions of the Supreme Court shall be binding."

The Court's final determinations were:

• The impugned notifications' validity is not adjudicated and is left to the Supreme Court.
• The impugned SCN and order are set aside for lack of proper notice and opportunity to be heard.
• The matter is remanded for fresh adjudication after proper service of notices and opportunity for personal hearing.
• Rights and remedies of parties remain open pending Supreme Court's decision.