2025 (7) TMI 781 - HC - GST

Challenge to SCN nad consquent order - vires of N/N. 56/2023-Central Tax dated 28th December 2023 and N/N. 56/2023-State Tax dated 11th July 2024 - extension of time limit for adjudication - impugned order was passed without providing the Petitioner with an opportunity to challenge the case on merits - violation of principles of natural justice - 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 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 SCN was issued on 12th December 2023 and the same was 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 SCN has been filed by the Petitioner the matter deserves to be remanded back to the concerned Adjudicating Authority. The Petitioner is granted time till 10th August 2025 to file a reply to the 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 in this matter include: (1) the validity and legality of certain notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 (the "GST Act"), specifically Notification Nos. 56/2023-Central Tax and 56/2023-State Tax; (2) whether the proper procedural requirements, including prior recommendation of the GST Council, were complied with before issuance of these notifications; (3) the impact of these notifications on the extension of time limits for adjudication of show cause notices and passing of orders under Section 73 of the GST Act; (4) the procedural fairness in issuing and adjudicating show cause notices, particularly when notices were uploaded under the 'Additional Notices Tab' on the GST portal and not effectively brought to the notice of the petitioner; and (5) the appropriate remedy and relief in cases where adjudication orders were passed ex-parte due to lack of opportunity to reply or appear for personal hearing.

Regarding the validity of the impugned notifications, the Court reviewed the statutory framework under Section 168A of the GST Act, which mandates that any extension of time limits for adjudication must be preceded by a recommendation from the GST Council. The notifications in question purported to extend such deadlines but were challenged on grounds that the procedural mandate was not followed properly. The Court noted that this issue has generated conflicting judicial opinions across various High Courts: the Allahabad and Patna High Courts upheld the validity of these notifications, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court made observations on invalidity without conclusively deciding the issue, and this matter is currently pending before the Supreme Court in S.L.P No. 4240/2025.

The Court acknowledged the ongoing Supreme Court proceedings and the principle of judicial discipline, choosing not to express a definitive opinion on the vires of Section 168A or the notifications themselves. Instead, it deferred to the Supreme Court's forthcoming judgment, directing that interim orders and reliefs granted in related matters continue to operate. This approach aligns with the Punjab and Haryana High Court's similar stance, which refrained from deciding on the validity of the notifications pending Supreme Court adjudication.

On the issue of procedural fairness in adjudication, the Court examined the facts concerning the issuance and communication of the show cause notice dated 12th December 2023. It was established that the notice was uploaded on the GST portal under the 'Additional Notices Tab', which was not effectively visible or brought to the petitioner's attention at the relevant time. Consequently, the petitioner did not file a reply nor appear for personal hearings, leading to ex-parte orders imposing substantial demands and penalties. The Court relied on its prior decisions, including W.P.(C) 13727/2024 and Satish Chand Mittal v. Sales Tax Officer, where similar circumstances led to remand of matters to ensure fair opportunity to be heard.

The Court emphasized that the GST portal's interface was modified only after 16th January 2024 to make the 'Additional Notices Tab' more visible, but since the impugned show cause notice was issued before this change, the petitioner was deprived of a fair chance to respond. On this basis, the Court set aside the impugned demand orders dated 23rd April 2024 and 5th December 2023. It granted the petitioner a specified time frame to file replies to the show cause notices and directed that personal hearing notices be communicated not only by uploading on the portal but also by e-mail and mobile communication to ensure actual receipt.

The Court's reasoning underscored the fundamental principle of natural justice that no order should be passed in default without affording the affected party a real opportunity to be heard. It recognized that procedural irregularities in communication of notices can vitiate the adjudication process and necessitate fresh consideration on merits. The Court thus remanded the matter to the adjudicating authority for fresh adjudication in accordance with law, after giving the petitioner a fair hearing.

While remanding, the Court expressly left open the question of the validity of the impugned notifications, clarifying that any fresh order passed by the adjudicating authority shall be subject to the outcome of the Supreme Court's decision in S.L.P No. 4240/2025 and this Court's decision in related matters. This preserves the parties' rights and remedies pending final judicial determination of the core legal issue concerning the notifications.

In summary, the Court's significant holdings include the following:

"The issue in respect of 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... and of this Court in W.P.(C) 9214/2024..."

"Since the Petitioner did not get a proper opportunity to be heard and no reply to the SCN 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."

Core principles established include the necessity of strict adherence to procedural fairness in tax adjudication, including effective communication of notices, and the imperative that statutory extensions of limitation periods under the GST Act must comply with the procedural requirements of Section 168A, including prior GST Council recommendation. The Court's approach balances respect for ongoing higher judicial scrutiny with protection of fundamental rights of parties in pending proceedings.

Ultimately, the Court disposed of the petition by setting aside the impugned orders, allowing the petitioner time to file replies, mandating proper communication of hearing notices, and remanding the matter for fresh adjudication, while reserving the question of notification validity for the Supreme Court's determination.