2025 (6) TMI 667 - HC - GST

Challenge to SCN and demand order - vires of N/N. 09/2023- Central Tax dated 31st March 2023 - submission of the Petitioner is that the SCN from which the impugned order arises was uploaded on the Additional Notices Tab therefore the same did not come to the knowledge of the Petitioner - Violation of principle sof natural justice - HELD THAT - In fact 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. 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 the impugned SCN in the present case was issued on 26th September 2023. Therefore considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the impugned 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.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the impugned Show Cause Notice (SCN) dated 26th September 2023 and the subsequent demand order dated 24th December 2023, issued by the Sales Tax Officer under the GST regime, are valid and enforceable.
• The vires and validity of Notification No. 09/2023-Central Tax dated 31st March 2023, and related notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), which purportedly extend the time limits for adjudication of SCNs and passing of orders under Section 73 of the GST Act.
• Whether the procedural safeguards, including the opportunity for personal hearing and proper communication of notices, were complied with in the issuance and adjudication of the impugned SCN and demand order.
• The impact of ongoing judicial scrutiny and conflicting High Court decisions on the validity of the impugned notifications and their effect on the present proceedings.
• The entitlement of the petitioner to file replies and be heard in light of the fact that notices were uploaded under the 'Additional Notices Tab' on the GST portal, which allegedly did not come to the petitioner's knowledge.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Impugned Notifications under Section 168A of the GST Act

Relevant legal framework and precedents: Section 168A of the GST Act empowers the government to extend the time limits for adjudication of SCNs and passing of orders under Section 73 of the GST Act, subject to prior recommendation by the GST Council. The impugned notifications, particularly Notification No. 09/2023 and Notification No. 56/2023, were issued purportedly under this provision to extend deadlines for the financial year 2019-2020.

Various High Courts have taken divergent views on the validity of these notifications. The Allahabad and Patna High Courts upheld the validity of Notifications No. 9 and 56 respectively, while the Guwahati High Court quashed Notification No. 56. The Telangana High Court raised serious doubts about the validity of Notification No. 56, and this matter is currently under consideration by the Supreme Court in S.L.P No. 4240/2025.

The Supreme Court has issued notices and interim orders in this matter, acknowledging the cleavage of opinion among High Courts and the importance of the issue.

Court's interpretation and reasoning: The Delhi High Court recognized the ongoing judicial conflict and the pendency of the Supreme Court's decision as determinative for the validity of the impugned notifications. The Court refrained from expressing any opinion on the vires of the notifications, deferring to the Supreme Court's forthcoming judgment.

Application of law to facts: Given the pendency of the Supreme Court's decision, the Court held that the validity of the impugned notifications must be left open and subject to the Supreme Court's final adjudication.

Treatment of competing arguments: While the petitioner challenged the notifications as invalid, the Court noted that the matter is sub judice before the Supreme Court and that various High Courts have taken differing views. The Court therefore adopted a stance of judicial discipline and restraint.

Conclusion: The Court held that the question of validity of the impugned notifications remains undecided and must await the Supreme Court's ruling.

Procedural Fairness in Issuance and Adjudication of Show Cause Notices and Demand Orders

Relevant legal framework and precedents: Principles of natural justice, including the right to be heard and the right to receive proper notice, are fundamental in tax adjudications. The GST Act and Rules require that SCNs be communicated effectively and that the noticee be afforded an opportunity for personal hearing before passing an order.

Precedents from this Court, including W.P.(C) 13727/2024 ('Neelgiri Machinery') and other cases, have held that mere uploading of notices under the 'Additional Notices Tab' on the GST portal, without effective communication, does not satisfy the requirement of proper notice. Orders passed ex parte in such circumstances have been set aside and remanded for fresh adjudication.

Court's interpretation and reasoning: The Court observed that the impugned SCN dated 26th September 2023 was uploaded only under the 'Additional Notices Tab', which was not visible or accessible to the petitioner at the relevant time. Consequently, the petitioner did not have actual knowledge of the SCN and was deprived of the opportunity to file a reply or appear for a personal hearing.

The Court noted that changes to the GST portal after 16th January 2024 made the 'Additional Notices Tab' visible, but this was not applicable to the present case as the SCN was issued earlier.

Key evidence and findings: The petitioner's assertion that the SCN was not brought to their notice and that no personal hearing was granted was supported by the procedural history and prior decisions of this Court in similar matters.

Application of law to facts: The Court applied the principle of audi alteram partem and held that the impugned demand order passed without providing the petitioner a fair opportunity to be heard and without a reply on record was liable to be set aside.

Treatment of competing arguments: The respondent argued that the notices were uploaded on the GST portal, but the Court emphasized that mere uploading under an obscure tab does not satisfy the requirement of effective communication.

Conclusion: The Court set aside the impugned demand order and remanded the matter to the adjudicating authority with directions to provide the petitioner an opportunity to file a reply and be heard through personal hearing. The Court further directed that hearing notices be communicated by e-mail and mobile to ensure effective notice.

Effect of Pending Supreme Court Proceedings on Adjudication

The Court acknowledged that the Supreme Court's decision in S.L.P No. 4240/2025 on the validity of the impugned notifications would have a binding effect on the present matter. It therefore left open the question of the notifications' validity and clarified that any fresh order passed by the adjudicating authority shall be subject to the outcome of the Supreme Court's decision.

Access to GST Portal and Filing of Replies

The Court directed that if the petitioner does not already have access to the GST portal, it must be provided to enable filing of replies and access to notices and related documents. The petitioner was granted time until 15th July 2025 to file its reply to the SCN.

3. 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 order is set aside. The Petitioner is granted time till 15th July 2025, to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner."

"The personal hearing notice shall be communicated to the Petitioner on the following e-mail address and mobile number... The reply filed by the Petitioner to the impugned SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and a fresh order with respect to the SCN shall be passed accordingly."

"All rights and remedies of the parties are left open."

Core principles established include:

• Effective communication of SCNs and hearing notices is mandatory and cannot be satisfied by mere uploading under an obscure tab on the GST portal.
• The right to be heard and file replies before passing orders under the GST Act is fundamental and must be scrupulously observed.
• Judicial discipline requires that courts defer to the Supreme Court on issues where conflicting High Court decisions exist, especially regarding the validity of statutory notifications.
• Pending Supreme Court decisions on the validity of impugned notifications must guide the adjudication process, with appropriate reservations.

Final determinations:

• The impugned demand order dated 24th December 2023 is set aside for failure to provide proper notice and opportunity to be heard.
• The petitioner is granted time to file replies and be heard through personal hearing, with directions for effective communication.
• The validity of the impugned notifications remains undecided and subject to the Supreme Court's ruling.