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2025 (5) TMI 380 - HC - GSTService of SCN - SCN have been uploaded on the Additional notices tab and the show cause notice did not come to the knowledge of the Petitioner - Validity of N/N. 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) - violation of principles of natural justice - HELD THAT - In the opinion of this Court considering that the rectification application is itself barred by limitation and the show cause notice was uploaded on the additional notices tab following the decision in NEELGIRI MACHINERY THROUGH ITS PROPRIETOR MR. ANIL KUMAR VERSUS COMMISSIONER DELHI GOODS AND SERVICE TAX AND OTHERS 2025 (3) TMI 1308 - DELHI HIGH COURT . Accordingly the Petitioner is permitted to file a reply to the show cause notice within one month - After hearing the Petitioner the Adjudicating Authority shall pass the order of adjudication. Needless to add that the adjudication order shall be subject to the outcome of the SLP pending in the Supreme Court where the impugned notification is challenged. Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Notification No. 09/2023-Central Tax and related notifications under Section 168A of the GST Act The legal framework centers on Section 168A of the Central GST Act, which mandates that any extension of time limits for adjudication of show cause notices and passing of orders requires prior recommendation of the GST Council. The Petitioner challenged the impugned notification on grounds of procedural irregularity and non-compliance with this statutory requirement. The Court noted that this issue is currently sub judice before the Supreme Court in S.L.P No. 4240/2025, involving similar notifications. Various High Courts have delivered conflicting judgments: the Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 of 2023, while the Guwahati High Court quashed Notification No. 56 of 2023. The Telangana High Court made observations on invalidity but did not conclusively decide the vires, and this matter is under Supreme Court consideration. The Court refrained from expressing any opinion on the validity of the notifications, acknowledging the judicial discipline and the binding effect of the Supreme Court's forthcoming decision. The Punjab and Haryana High Court had similarly stayed proceedings pending Supreme Court adjudication, and this Court followed the same approach. Issue 2: Procedural fairness in issuance and adjudication of show cause notices The Petitioner contended that the show cause notice dated 26th September 2023 was uploaded on the GST portal under the "Additional Notices and Orders" tab, which was not prominently visible, resulting in the Petitioner not receiving actual notice and being unable to file replies or appear for hearings. This led to ex-parte orders and imposition of demands and penalties. The Court relied on the precedent set in W.P.(C) 13727/2024 ('Neelgiri Machinery'), which dealt with a similar issue regarding the visibility of SCNs on the GST portal. The Court observed that the Department conceded the portal functions differently from the Department's side and the taxpayer's side, causing notices to be less visible to taxpayers. Further reliance was placed on judgments in 'Satish Chand Mittal' and 'Anant Wire Industries', where under similar circumstances, matters were remanded to ensure fair opportunity to be heard. The Court emphasized the principle that orders should not be passed in default where there is ambiguity or lack of clarity in communication of notices. Applying these precedents, the Court set aside the demand order dated 25th December 2023 and other impugned demand orders dated 23rd April 2024 and 5th December 2023. It directed that the Petitioner be given an opportunity to file replies within thirty days and that hearing notices be communicated not only by uploading on the portal but also by email to ensure actual notice. Issue 3: Limitation and rectification application The Petitioner's rectification application dated 15th February 2023 was noted to be barred by limitation. Nonetheless, the Department expressed willingness to consider it. The Court did not delve deeply into the merits of the rectification application but acknowledged its limitation-barred status and focused on ensuring procedural fairness in the ongoing adjudication process. Issue 4: Relief pending Supreme Court decision Given the pendency of the Supreme Court's decision on the validity of the impugned notifications, the Court adopted a pragmatic approach. It categorized pending cases and proposed that, without prejudging the validity of the notifications, Petitioners be afforded opportunity to place their stand before the adjudicating authorities. This approach balances the need to protect taxpayers' rights to be heard with the necessity to await authoritative determination of the legal validity of the notifications. The Court ordered that the Petitioner be permitted to file replies to the show cause notices within thirty days, with personal hearings to be conducted via email communication. The adjudicating authority was directed to pass orders after hearing the Petitioner, subject to the outcome of the Supreme Court's decision in S.L.P No. 4240/2025. 3. SIGNIFICANT HOLDINGS On the validity of the impugned notifications, the Court held: "Since the challenge to the above mentioned notification is presently under consideration before the Supreme Court in S.L.P No 4240/2025 ..., the challenge made by the Petitioner to the impugned notification in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court." On the procedural fairness regarding SCNs uploaded under the "Additional Notices and Orders" tab, the Court observed: "The Department concedes that the portal works differently from the Department's side and the tax payer's side. Insofar as the Petitioner is concerned, the Department was not being able to view them on the Notices tab. The Petitioner, in support of its case, has placed on record the print out from the portal which shows that the same was viewable only on Additional notice and orders Tab and hence, may have been missed by the Petitioner." Further, the Court reiterated the principle that: "The intention is to ensure that the Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default." Accordingly, the Court set aside the impugned demand orders and directed: "The Petitioner shall file its replies within thirty days. 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. The show cause notices shall be adjudicated in accordance with law." Core principles established include:
Final determinations:
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