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2025 (5) TMI 1265 - HC - GSTExtension of time limit of issuance of SCN u/s 73 / 74 - Validity of Notification No. 09/2023-Central Tax and Notification No. 56/2023 (Central Tax) - procedural requirements under Section 168A for prior to the issuance of notifications - non-appearance of the Petitioner at the personal hearing - Challenging the SCN and impugned order - HELD THAT - Considering the fact that an opportunity for personal hearing was granted to the Petitioner let the Petitioner file an appeal before the Appellate Authority along with pre-deposit by 10th July 2025. However it is made clear that the issue in respect of the validity of the impugned notifications is left open. Any order passed by the Appellate Authority shall be subject to the outcome of the decision of the Supreme Court in M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax Ors. 2025 (4) TMI 60 - SC ORDER . Petition is disposed of in these terms.
Issues Presented and Considered
The core legal questions considered by the Court include:
Issue-Wise Detailed Analysis Validity of the Impugned Notifications under Section 168A of the GST Act Legal Framework and Precedents: Section 168A of the GST Act mandates that any extension of the time limit for adjudication of demands must be made only upon prior recommendation of the GST Council. The impugned notifications, Nos. 09/2023 and 56/2023, purportedly extend the limitation period for adjudication of show cause notices and passing of orders under Section 73 of the GST Act. Several High Courts have considered the validity of these notifications with divergent outcomes. The Allahabad High Court upheld Notification No. 09/2023, while the Patna High Court upheld Notification No. 56/2023. Conversely, the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court made observations on the invalidity of Notification No. 56/2023 without deciding the vires and the matter is currently pending before the Supreme Court in S.L.P No. 4240/2025. Court's Interpretation and Reasoning: The Court acknowledged the split in judicial opinions and noted the ongoing Supreme Court proceedings. It recognized that Notification No. 09/2023 was issued following the GST Council's recommendation, whereas Notification No. 56/2023 was challenged on grounds that the extension was granted contrary to Section 168A's mandate, with ratification occurring post issuance and incorrect statements regarding GST Council approval. Application of Law to Facts: The Court refrained from expressing any opinion on the validity of the impugned notifications, deferring to the Supreme Court's forthcoming decision. It observed that the interim orders passed by other High Courts and the Supreme Court's notice in the SLP indicated the importance of judicial discipline and the need to await the apex court's ruling. Treatment of Competing Arguments: While the Petitioner challenged the notifications' validity, the Respondents relied on the notifications as valid extensions of limitation. The Court balanced these by allowing the continuation of proceedings subject to the Supreme Court's final verdict, thus preserving the rights of both parties pending authoritative determination. Conclusion: The Court held the issue regarding the validity of the impugned notifications in abeyance, subject to the Supreme Court's decision in the related SLP. Validity and Sustainability of the Show Cause Notice and Demand Order Legal Framework: The issuance of show cause notices and demand orders under the GST Act must comply with prescribed procedural safeguards, including the opportunity of personal hearing and the limitation period for adjudication. Key Evidence and Findings: The Petitioner filed a reply to the show cause notice on 26th October 2023 and was granted an opportunity for personal hearing but failed to appear. The demand order was passed subsequently. Court's Reasoning: The Court noted that the Petitioner had been afforded procedural fairness through the opportunity of a personal hearing and the chance to file a reply. Non-appearance at the hearing weakened the Petitioner's position. Application of Law to Facts: Given the procedural opportunities granted, the Court did not interfere with the issuance of the show cause notice and demand order on procedural grounds. However, it allowed the Petitioner to file an appeal before the Appellate Authority, subject to pre-deposit, thereby preserving the Petitioner's appellate remedies. Competing Arguments: The Petitioner argued that ex-parte orders were passed due to inability to file replies or attend hearings, seeking relief on that basis. The Respondents contended that sufficient procedural opportunities were provided. The Court sided with the Respondents on procedural adequacy but provided a remedy through appellate proceedings. Conclusion: The Court permitted the Petitioner to appeal with a pre-deposit by 10th July 2025, emphasizing that any appellate order would be subject to the Supreme Court's decision on the notifications' validity. Interim Relief and Procedural Opportunities Pending Supreme Court Decision Legal Framework and Precedents: Judicial discipline mandates that lower courts and tribunals refrain from deciding issues pending before the Supreme Court, especially where there is a split in High Court decisions. Interim relief is typically granted to preserve parties' rights without prejudging the substantive issues. Court's Reasoning: The Court observed that multiple High Courts had passed interim orders maintaining the status quo and that the matter was pending before the Supreme Court. It recognized the Petitioner's difficulties in filing replies and attending hearings but balanced this with the need to respect the appellate and adjudicatory process. Application to Facts: The Court categorized the petitions into six broad categories and indicated that depending on the category, appropriate procedural relief could be granted to enable the Petitioners to place their case before the adjudicating authority or pursue appellate remedies. Competing Arguments: The Petitioner sought broader reliefs including quashing of ex-parte orders and extension of time to file replies. The Respondents urged adherence to procedural norms and the continuation of proceedings. The Court struck a balance by allowing appeals and hearings but refraining from deciding the notifications' validity. Conclusion: The Court disposed of the petition with directions to file appeals and explicitly left open the question of the notifications' validity pending the Supreme Court's ruling. Significant Holdings "The issue in respect of the validity of the impugned notifications is left open. Any order passed by the Appellate Authority shall be subject to the outcome of the decision of the Supreme Court in S.L.P No 4240/2025." "Considering the fact that an opportunity for personal hearing was granted to the Petitioner, let the Petitioner file an appeal before the Appellate Authority along with pre-deposit by 10th July, 2025." "Keeping in view the judicial discipline, we refrain from giving our opinion with respect to the vires of Section 168-A of the Act as well as the notifications issued in purported exercise of power under Section 168-A of the Act which have been challenged, and we direct that all these present connected cases shall be governed by the judgment passed by the Hon'ble Supreme Court and the decision thereto shall be binding on these cases too." Core principles established include the necessity of prior recommendation by the GST Council for extending limitation periods under Section 168A, the importance of procedural fairness including personal hearings, and the imperative to respect the apex court's jurisdiction in matters involving conflicting High Court decisions. Final determinations were that the Court would not adjudicate on the validity of the impugned notifications but would allow procedural remedies such as appeals and pre-deposit, ensuring that the Petitioner's rights are preserved pending the Supreme Court's authoritative decision.
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