2025 (7) TMI 54 - HC - GST

Violation of principles of natural justice - service of notice - the SCN from which the impugned orders arise were uploaded on the Additional Notices Tab - impugned orders were passed without providing the Petitioner with an opportunity to challenge the case on merits - 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 show cause notice was uploaded on the 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 show cause notices were issued on 1st December 2023 and 25th September 2023 and the same were not brought to the notice of the Petitioner. Under such circumstances considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the show cause notices dated 1st December 2023 and 25th September 2023 has been filed by the Petitioner the matter deserves to be remanded back to the concerned Adjudicating Authority. The impugned order set aside - petition allowed by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in the judgment include:

• The validity and legality of certain notifications issued under the Central Goods and Services Tax Act, 2017 (CGST Act), specifically Notification Nos. 56/2023 (Central and State Tax) and 09/2023 (Central Tax), issued under Section 168A of the CGST Act, which purportedly extend the time limits for adjudication of show cause notices and passing of orders under Section 73 of the GST Act.
• Whether the notifications were issued following the proper statutory procedure, including the requirement of prior recommendation by the GST Council as mandated by Section 168A.
• The effect of conflicting judicial pronouncements from various High Courts regarding the validity of these notifications and the implications of the pending Supreme Court proceedings on the issue.
• The procedural fairness in adjudication of show cause notices where notices were uploaded on the GST portal under the 'Additional Notices Tab', which was not adequately communicated to the petitioner, resulting in ex-parte orders without opportunity to be heard.
• The appropriate remedial measures to be adopted in cases where petitioners were not given proper notice or opportunity to respond to show cause notices.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of Notifications under Section 168A of the CGST Act

Relevant legal framework and precedents: Section 168A of the CGST Act empowers the government to extend the time limit for adjudication of show cause notices and passing of orders under Section 73, subject to the prior recommendation of the GST Council. The notifications challenged include Notification No. 56/2023 (Central and State Tax) and Notification No. 09/2023 (Central Tax), which purportedly extend these deadlines.

Several High Courts have delivered conflicting judgments on the validity of these notifications. The Allahabad High Court upheld Notification No. 09/2023, the Patna High Court upheld Notification No. 56/2023, while the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court raised observations on the invalidity of Notification No. 56/2023 (Central Tax), which is presently under consideration by the Supreme Court in S.L.P No. 4240/2025.

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

Court's interpretation and reasoning: The Delhi High Court noted the divergence in judicial opinions and the pendency of the Supreme Court proceedings. The Court prudently refrained from expressing any opinion on the validity of the impugned notifications, deferring to the Supreme Court's final adjudication.

Application of law to facts and treatment of competing arguments: The Court acknowledged the submissions challenging the notifications on procedural grounds, particularly the lack of prior GST Council recommendation in some cases and the timing of issuance relative to limitation periods. The Court also noted the submissions that even if the notifications were upheld, relief should be granted due to procedural lapses in individual adjudications.

Conclusions: The Court held that the question of validity of the impugned notifications remains open and subject to the Supreme Court's decision. The Court directed that the final orders passed by adjudicating authorities would be subject to the outcome of the Supreme Court proceedings.

Procedural Fairness and Opportunity to be Heard in Adjudication of Show Cause Notices

Relevant legal framework and precedents: Principles of natural justice require that a party against whom adverse orders are passed must be given adequate notice and opportunity to be heard. The GST regime mandates issuance of show cause notices and personal hearings before passing orders under Section 73.

Previous judgments of the Delhi High Court, including in 'Neelgiri Machinery' and 'Satish Chand Mittal', have emphasized that non-communication or inadequate communication of show cause notices, especially when notices are uploaded under less visible tabs on the GST portal, violates the right to be heard and mandates remand of the matter for fresh adjudication.

Court's interpretation and reasoning: The Court found that in the present case, the show cause notices dated 1st December 2023 and 25th September 2023 were uploaded on the 'Additional Notices Tab' of the GST portal, which was not adequately brought to the petitioner's notice. This resulted in no replies being filed and ex-parte orders being passed. The Court observed that changes made to the GST portal after 16th January 2024, which improved visibility of the 'Additional Notices Tab', did not apply to the notices issued before that date.

Key evidence and findings: The petitioner's non-receipt of notices and consequent inability to file replies or attend personal hearings was established. The Court also noted prior orders in similar cases where remand was granted to ensure fair opportunity.

Application of law to facts and treatment of competing arguments: The Court applied the principle of audi alteram partem and held that the petitioner must be given an opportunity to file replies and be heard before orders are passed. The Court rejected any departmental contention that uploading on the portal sufficed as notice, especially when the tab was not visible or known to the petitioner.

Conclusions: The Court set aside the impugned demand orders and remanded the matters to the adjudicating authority for fresh adjudication after providing the petitioner with an opportunity to file replies and be heard. The Court directed that hearing notices be communicated not only by uploading on the portal but also by email and mobile communication to ensure effective notice.

Effect of Pending Supreme Court Proceedings and Interim Orders

Relevant legal framework and precedents: Judicial discipline and the principle of comity require lower courts to refrain from deciding issues pending before the Supreme Court. The Punjab and Haryana High Court, in a related matter, disposed of petitions with directions that the interim orders would continue and final adjudication would be governed by the Supreme Court's decision.

Court's interpretation and reasoning: The Delhi High Court followed this approach, noting the pendency of the Supreme Court's SLP and the conflicting High Court decisions. The Court disposed of several writ petitions with the observation that the validity of the impugned notifications would be subject to the Supreme Court's outcome.

Conclusions: The Court left the question of validity open and emphasized that all rights and remedies of parties remain open pending the Supreme Court's decision.

3. SIGNIFICANT HOLDINGS

"The question of 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 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. and of this Court in W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India & Ors."

"Since the Petitioner did not get a proper opportunity to be heard and no reply to the show cause notices dated 1st December, 2023 and 25th September, 2023 has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority."

"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."

"All rights and remedies of the parties are left open. Access to the GST Portal shall be provided to the Petitioner to enable uploading of the reply as also access to the notices and related documents."

Core principles established include:

• The necessity of strict compliance with procedural fairness and natural justice in GST adjudications, including effective communication of notices and opportunity to be heard.
• The requirement that extensions of limitation periods under Section 168A of the CGST Act must follow the statutory mandate of prior GST Council recommendation and proper issuance procedures.
• The recognition of judicial restraint in matters pending before the Supreme Court, with interim orders to govern pending final adjudication.
• The importance of ensuring that technological platforms (GST portal) do not impede the procedural rights of taxpayers by obscuring notices.

Final determinations on each issue are:

• The validity of the impugned notifications is not decided and remains subject to the Supreme Court's ruling.
• The impugned demand orders passed without providing effective notice and opportunity to be heard are set aside.
• The matters are remanded for fresh adjudication after giving the petitioner opportunity to file replies and be heard through proper communication channels.
• The petitioner's rights to access the GST portal and related documents are to be ensured.