2025 (5) TMI 1348 - HC - GST

Challenge to SCN and consequent demand order - challenge to N/N. 56/2023-Central Tax dated 28th December 2023 - extension of time limits for adjudication - 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 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 writ petition was filed in the year 2024 raising issues as to the validity of the impugned notification. 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 impugned order is set aside - petition disposed off by way of remand.

The core legal questions considered in this judgment include:

1. Whether the show cause notice (SCN) dated 16th May 2024 and the consequent adjudication order dated 19th August 2024, issued by the Department of Trade and Taxes, GNCTD, were validly issued and whether the petitioner was afforded a fair opportunity to respond and be heard.

2. The vires and validity of Notification No. 56/2023-Central Tax dated 28th December 2023, particularly whether it was issued in compliance with the procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), including the necessity of prior recommendation by the GST Council before extending deadlines for adjudication.

3. The procedural fairness and adequacy of the communication mechanism employed by the Department, specifically the uploading of notices on the 'Additional Notices Tab' of the GST portal and whether this method provided effective notice to the petitioner.

4. The impact of pending Supreme Court proceedings on the adjudication of the petitioner's case and whether interim relief or directions should be granted pending the Supreme Court's decision.

Issue-wise detailed analysis:

Validity of the Impugned Notification No. 56/2023-Central Tax

The legal framework revolves around Section 168A of the GST Act, which mandates that any extension of time limits for adjudication of show cause notices and passing orders under Section 73 requires prior recommendation of the GST Council. The petitioner challenged Notification No. 56/2023 on the ground that it was issued without following the mandated procedure, with ratification by the GST Council occurring only after issuance, thereby rendering it ultra vires.

The Court noted that this issue had been extensively litigated in various High Courts with divergent opinions: the Allahabad and Patna High Courts upheld the validity of the notification, whereas the Guwahati High Court quashed it. The Telangana High Court expressed doubts about its validity, and this question is presently pending before the Supreme Court in SLP No. 4240/2025.

The Court observed that since the Supreme Court has taken cognizance of the issue and issued notice, and given the conflicting High Court decisions, the matter is sub judice at the highest judicial level. The Punjab and Haryana High Court had also refrained from expressing any opinion on the validity of Section 168A and related notifications, deferring to the Supreme Court's forthcoming judgment.

Consequently, the Court refrained from adjudicating the validity of Notification No. 56/2023 and related procedural questions, leaving the issue open pending the Supreme Court's decision.

Procedural Fairness in Issuance and Communication of Show Cause Notices

The petitioner contended that the SCN dated 16th May 2024 and subsequent hearing notices were uploaded only on the 'Additional Notices Tab' of the GST portal, which was not adequately visible or accessible, resulting in the petitioner being unaware of the notices and unable to file replies or appear for hearings. This led to ex-parte adjudication and imposition of demands and penalties without a fair opportunity to be heard.

The Department countered that after 16th January 2024, the portal was rectified to ensure visibility of notices on the 'Additional Notices Tab'. However, the petitioner's grievance pertained to notices issued prior to or around that date, when the portal's configuration was deficient.

The Court relied on precedents from this High Court, including decisions in "Neelgiri Machinery" and "Satish Chand Mittal," where similar issues arose due to notices being uploaded in less visible sections of the portal. Those precedents emphasized the fundamental principle of natural justice that no orders should be passed in default without ensuring the noticee has a fair opportunity to respond and be heard.

The Court held that the petitioner's right to be heard was compromised due to inadequate communication of notices. It remanded the matter to the adjudicating authority with directions to afford the petitioner a fresh opportunity to file replies and to conduct personal hearings. The Court further directed that hearing notices should not only be uploaded on the portal but also communicated via email and mobile phone to ensure effective notice.

Impact of Pending Supreme Court Proceedings and Interim Relief

Given the pendency of the Supreme Court's decision on the validity of the impugned notifications, the Court adopted a cautious approach. It acknowledged that while the question of validity remains open, it is imperative to ensure that the petitioner is not prejudiced by procedural lapses or ex-parte orders.

Therefore, the Court disposed of the writ petition with directions for fresh adjudication after affording the petitioner an opportunity to be heard, explicitly stating that any fresh order passed shall be subject to the outcome of the Supreme Court's decision in the related SLP.

The Court also preserved all rights and remedies of the parties, including access to the GST portal for uploading replies and accessing notices and documents.

Significant holdings and core principles established:

"Be that as it may, 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."

The Court underscored the fundamental principle of natural justice that no adjudication order should be passed without affording the party a fair opportunity to respond and be heard, especially where procedural lapses in communication have occurred.

It was held that uploading notices only on an obscure or less visible tab on the GST portal does not constitute effective notice, and additional modes of communication such as email and mobile phone alerts are necessary to ensure fairness.

The Court explicitly refrained from deciding on the constitutional and statutory validity of Notification No. 56/2023, recognizing the ongoing Supreme Court proceedings and the conflicting High Court rulings, thereby preserving judicial discipline and avoiding conflicting judgments.

Finally, the Court directed that the impugned order be set aside, the petitioner be granted time till 10th July 2025 to file replies, and the adjudicating authority shall pass a fresh order after personal hearing, with the caveat that the validity issue remains open and subject to Supreme Court's final decision.

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