2025 (6) TMI 736 - HC - GST

Challenge to SCN and consequent order - vires of N/N. 56/2023- Central Tax dated 28th December 2023 as also the N/N. 56/2023-State Tax dated 11th July 2024 - impugned order passed without providing the Petitioner a personal hearing and in the absence of a reply on behalf of the Petitioner - 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 vide 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 2025 raising issues as to the validity of the impugned notifications. 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.

Summary

The core legal questions considered in this judgment include:

1. Whether the impugned Show Cause Notice (SCN) and consequent adjudication order were validly issued and passed, particularly in light of procedural fairness and opportunity to be heard.

2. The vires and validity of Notification No. 56/2023-Central Tax and Notification No. 56/2023-State Tax issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), specifically whether the notifications were lawfully issued following the prescribed procedure, including the requirement of prior recommendation by the GST Council.

3. The effect of the ongoing judicial scrutiny and conflicting High Court decisions on the validity of the impugned notifications, and the impact of pending Supreme Court proceedings on the adjudication of tax demands arising from these notifications.

4. The adequacy and accessibility of communication of SCNs and hearing notices to the petitioner, particularly the issue of notices being uploaded under the 'Additional Notices Tab' on the GST portal and whether this sufficed as proper service.

5. The appropriate relief and procedural directions to be granted in cases where the petitioner was not afforded an opportunity to file replies or participate in personal hearings, leading to ex-parte adjudication orders.

Issue-wise Detailed Analysis:

Validity of the Impugned Notifications under Section 168A of the GST Act

The relevant legal framework involves Section 168A of the GST Act, which mandates that any extension of time limits for adjudication of show cause notices and passing orders requires prior recommendation from the GST Council. The notifications challenged purportedly extended such time limits.

Precedents include various High Court decisions with divergent views: the Allahabad High Court upheld Notification No. 9, the Patna High Court upheld Notification No. 56, while the Guwahati High Court quashed Notification No. 56 (Central Tax). The Telangana High Court raised observations on the invalidity of Notification No. 56, which is currently under Supreme Court consideration in S.L.P No. 4240/2025.

The Court noted that the Supreme Court has issued notices and interim orders in the matter, acknowledging the cleavage of opinion among High Courts and the complexity of the issue. The Punjab and Haryana High Court refrained from expressing any opinion on the vires of Section 168A or the notifications, deferring to the Supreme Court's eventual ruling.

The Court's reasoning was that since the matter is sub judice before the Supreme Court, it is prudent to await the apex court's decision before delving into the validity of the notifications. Consequently, the Court disposed of several related petitions with the caveat that the validity of the impugned notifications would be subject to the Supreme Court's outcome.

Procedural Fairness and Opportunity to be Heard in Adjudication Proceedings

The petitioner contended that the SCN dated 24th May 2024 was uploaded under the 'Additional Notices Tab' on the GST portal, which was not adequately brought to their notice, resulting in no reply being filed and no personal hearing granted before the impugned order dated 17th August 2024 was passed.

The Court relied on its prior decisions, including W.P.(C) 13727/2024 and others, where it was held that merely uploading notices under the 'Additional Notices Tab' without proper communication does not constitute valid service. The Court emphasized that orders should not be passed ex-parte without affording the petitioner a fair opportunity to respond and be heard.

The Court cited the judgment in Satish Chand Mittal (supra), which underscored that the petitioner must have access to notices and the opportunity to participate in hearings. The Court noted that subsequent changes to the GST portal had improved visibility of the 'Additional Notices & Orders' tab, but these changes post-dated the issuance of the impugned SCN and order in the present case.

Applying these principles, the Court set aside the impugned order and directed the petitioner to be granted time to file replies to the SCN. It further mandated that hearing notices should not only be uploaded on the portal but also communicated via email and mobile to ensure actual notice. The adjudicating authority was directed to conduct personal hearings and pass fresh orders after considering the petitioner's submissions.

Impact of Pending Supreme Court Proceedings and Judicial Discipline

The Court acknowledged the ongoing Supreme Court proceedings and the conflicting High Court rulings on the validity of the impugned notifications. In the interest of judicial discipline and consistency, the Court refrained from expressing any final opinion on the validity of the notifications and held that any orders passed by the adjudicating authority shall be subject to the Supreme Court's final decision.

The Court also noted that the challenge to the parallel State Notifications was retained for consideration by the High Court, indicating a nuanced approach to different notifications issued under the GST framework.

Access to GST Portal and Related Documents

The Court emphasized that the petitioner must be provided access to the GST portal if not already available, to enable filing of replies and access to all notices and related documents. This was to ensure procedural fairness and transparency in the adjudication process.

Treatment of Competing Arguments

The Department argued that the notifications were validly issued and that the petitioner had access to the portal. The petitioner countered that the notices were not effectively communicated and that the procedural safeguards were not followed, resulting in ex-parte orders.

The Court balanced these arguments by recognizing the procedural deficiencies in communication and the ongoing legal uncertainty regarding the notifications' validity. It granted interim relief to the petitioner by remanding the matter for fresh consideration, while leaving the substantive validity of the notifications open pending Supreme Court adjudication.

Conclusions

The Court concluded that:

• The impugned order dated 17th August 2024 is set aside on grounds of denial of opportunity to be heard.
• The petitioner is granted time till 10th July 2025 to file replies to the SCN.
• Hearing notices must be communicated via email and mobile in addition to portal upload.
• The adjudicating authority must conduct personal hearings and pass fresh orders after considering the petitioner's submissions.
• Access to the GST portal must be ensured for the petitioner.
• The validity of the impugned notifications remains an open issue, subject to the Supreme Court's decision in S.L.P No. 4240/2025 and this Court's consideration of parallel State Notifications.
• All rights and remedies of the parties are preserved.

Significant Holdings:

"Since there is no clarity on behalf of the Department, this Court follows the order dated 9th September, 2024 in Satish Chand Mittal (Trade Name National Rubber Products) vs. Sales Tax Officer SGST, Ward 25-Zone 1 ... where the Court under similar circumstances has remanded back the matter to ensure the Noticee/Petitioners get a fair opportunity to be heard."

"The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly."

"It is made clear that 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 this Court in W.P.(C) 9214/2024."

Core principles established include the necessity of procedural fairness in tax adjudication proceedings, specifically the requirement of effective communication of notices and opportunity for personal hearing before passing orders. The judgment also reinforces judicial discipline by deferring to the Supreme Court on complex questions of statutory interpretation concerning the validity of tax notifications.