2025 (6) TMI 1066 - HC - GST

Challenge to SCN and consequent order - vires of N/N. 9/2023- Central Tax dated 31st March 2023 - Extension of time limitation for adjudication of SCN - Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed - 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 holding that The impugned demand orders dated 23rd April 2024 and 5th December 2023 are accordingly set aside. In response to show cause notices dated 04th December 2023 and 23th September 2023 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. 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 27th September 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 impugned order is set aside. The Petitioner is granted time till 10th July 2025 to file the reply to SCN - Petition disposed off.

Summary

The core legal questions considered by the Court in this matter include: (1) the validity and vires of Notification No. 9/2023-Central Tax dated 31st March 2023 and related notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 ("GST Act"); (2) the procedural fairness and adequacy of notice provided to the Petitioner in respect of the show cause notice ("SCN") dated 27th September 2023 and subsequent adjudication order dated 15th December 2023; (3) the implications of the procedural irregularities concerning the issuance and communication of notices via the GST portal, specifically the use of the 'Additional Notices Tab'; and (4) the appropriate remedial measures in light of the ongoing Supreme Court proceedings concerning the validity of the impugned notifications.

Regarding the validity of the impugned notifications issued under Section 168A of the GST Act, the Court examined the procedural requirements stipulated by the statute, particularly the necessity of prior recommendation by the GST Council before extending time limits for adjudication of show cause notices and passing orders under Section 73 of the GST Act. The Court noted that while Notification No. 9/2023 was issued following the GST Council's recommendation, Notification No. 56/2023 faced challenges for purportedly being issued without proper prior recommendation, with ratification occurring only post-issuance. This procedural discrepancy formed the basis of various High Courts' divergent rulings: the Allahabad and Patna High Courts upheld the notifications' validity, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court expressed reservations regarding Notification No. 56/2023 without deciding on its vires, and this issue is presently under the Supreme Court's consideration in SLP No. 4240/2025.

The Court acknowledged the judicial discipline necessitating deference to the Supreme Court's impending decision on this contentious issue and accordingly refrained from expressing any conclusive opinion on the validity of the impugned notifications. It noted that various High Courts had stayed proceedings or disposed of related writ petitions pending the Supreme Court's ruling, emphasizing that the final determination on the notifications' legality would bind all subordinate courts and authorities.

On the issue of procedural fairness and adequacy of notice, the Court critically examined the Petitioner's grievance that the SCN dated 27th September 2023 and subsequent reminder notices were uploaded only on the 'Additional Notices Tab' of the GST portal, which was not prominently visible or brought to the Petitioner's attention. This resulted in the Petitioner being unaware of the proceedings and unable to file replies or participate in personal hearings, leading to ex-parte adjudication orders and imposition of demands and penalties.

The Court relied on its prior decisions and consistent judicial precedents emphasizing the fundamental principle of audi alteram partem (right to be heard) in tax adjudications. It referred to earlier rulings where similar procedural lapses in notice communication via the GST portal had led to remand of matters for fresh adjudication after affording the affected parties a fair opportunity to respond. The Court underscored that mere uploading of notices on a less accessible tab without adequate communication does not satisfy the requirement of effective service of notice, especially when the portal's interface was modified only after the issuance of the impugned SCN.

Applying these principles to the facts, the Court found that the Petitioner had been denied a proper opportunity to be heard due to the non-communication of notices beyond the portal upload. The Court therefore set aside the impugned order dated 15th December 2023 and the related demand orders. It directed the Petitioner to file replies to the SCN within a stipulated timeframe and mandated that future hearing notices be communicated not only via the portal but also through email and mobile phone to ensure actual receipt. The Court ordered the adjudicating authority to consider the Petitioner's submissions afresh and pass a reasoned order in accordance with law.

While remanding the matter for fresh adjudication, the Court explicitly left open the question of the validity of the impugned notifications, clarifying that any future orders would be subject to the Supreme Court's decision in the pending SLP. The Court also preserved all rights and remedies of the parties and directed that the Petitioner be granted access to the GST portal to facilitate filing of replies and viewing of notices and documents.

The Court's approach balanced the need to respect the ongoing higher court proceedings on the notifications' validity with the imperative of ensuring procedural fairness and due process in tax adjudications. It recognized that even if the impugned notifications are ultimately upheld, the Petitioner must be afforded a meaningful opportunity to contest the SCN on merits rather than suffer ex-parte orders due to technical or procedural lapses in notice communication.

In conclusion, the significant holdings of the Court include the following:

"The Court follows the principle that orders are not to be passed in default where the noticee has not been properly served or made aware of the proceedings. Mere uploading of notices on a non-prominent tab of the GST portal does not constitute effective service."

"The impugned order is set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication after affording the Petitioner a fair opportunity to file replies and be heard."

"The validity of the impugned notifications issued under Section 168A of the GST Act is left open and shall be subject to the outcome of the Supreme Court proceedings in S.L.P No. 4240/2025."

"All rights and remedies of the parties are preserved, and access to the GST portal shall be provided to the Petitioner for uploading replies and accessing notices."

These core principles reinforce the necessity of procedural fairness in tax adjudications and the requirement of strict compliance with statutory procedures for issuance of notifications extending limitation periods. The Court's order ensures that taxpayers are not prejudiced by administrative or technical deficiencies and that adjudication proceeds on a fair and transparent basis pending final judicial determination of the notifications' validity.