SCN uploaded on wrong portal tab without petitioner's knowledge violates natural justice principles

The Delhi HC set aside an adjudication order where the SCN was uploaded on the 'Additional Notices Tab' without coming to the petitioner's knowledge, violating principles of natural justice. The court noted that no personal hearing was provided and no reply was filed by the petitioner. Following precedent from Neelgiri Machinery case involving similar circumstances, the HC remanded the matter for fresh consideration. The court acknowledged that the Department had rectified portal issues post-January 2024, but since this SCN was from September 2023, a fresh hearing was warranted. The matter was remanded for consideration on merits.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

• Whether the show cause notice (SCN) dated 27th September 2023 and the consequent order dated 24th December 2023, issued under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act), were validly issued and adjudicated, particularly in light of procedural fairness and service of notice.
• The validity and legality of Notification No. 9/2023-Central Tax dated 31st March 2023, issued under Section 168A of the CGST Act, which purportedly extended the time limit for adjudication of SCNs and passing of orders.
• The broader constitutional and statutory validity of extensions of limitation periods under Section 168A of the CGST Act, especially given conflicting High Court decisions and pending Supreme Court adjudication.
• Whether the procedure followed in issuing the impugned notifications complied with the mandatory requirement of prior recommendation by the GST Council as per Section 168A of the CGST Act.
• The adequacy of service of notices to the Petitioner, specifically whether uploading the SCN on the 'Additional Notices Tab' of the GST portal sufficed as effective communication.
• The entitlement of the Petitioner to personal hearing and opportunity to file replies before passing orders under the CGST Act.

2. ISSUE-WISE DETAILED ANALYSIS

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

Legal Framework and Precedents: Section 168A of the CGST Act empowers the Central Government to extend the time limit for adjudication of show cause notices and passing of orders, subject to the prior recommendation of the GST Council. The impugned notifications (Nos. 9 and 56 of 2023) purportedly extend such deadlines.

Several High Courts have taken divergent views on the validity of these notifications. The Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 respectively, whereas the Guwahati High Court quashed Notification No. 56 (Central Tax). The Telangana High Court raised doubts regarding the validity of Notification No. 56 (Central Tax), and this issue is presently under consideration by the Supreme Court in SLP No. 4240/2025.

The Supreme Court has issued notice and listed the matter for hearing, highlighting the cleavage of opinion amongst High Courts on the issue. The Punjab and Haryana High Court, acknowledging the pending Supreme Court proceedings, refrained from expressing any opinion and stayed to the Supreme Court's eventual decision.

Court's Interpretation and Reasoning: This Court recognized the conflicting judicial opinions and the pendency of the Supreme Court's decision. Accordingly, it refrained from adjudicating the validity of the impugned notifications and held that the challenge to the notifications shall be subject to the outcome of the Supreme Court's ruling.

Application of Law to Facts: The Court noted that since the Petitioner's challenge to the impugned notification is part of a batch of petitions pending before the Supreme Court, the present petition's challenge to the notification must await the Supreme Court's decision.

Treatment of Competing Arguments: While the Petitioner challenged the notifications on procedural grounds, including the absence of prior recommendation by the GST Council in some instances, the Court deferred the issue to the Supreme Court, acknowledging the ongoing litigation and conflicting High Court rulings.

Conclusion: The Court left the issue of the notifications' validity open and subject to the Supreme Court's final decision.

Validity of Show Cause Notice and Adjudication Order - Procedural Fairness and Service of Notice

Legal Framework and Precedents: Section 73 of the CGST Act governs the adjudication of demands relating to tax periods. Principles of natural justice require that a show cause notice be properly served and the party be given an opportunity of personal hearing before passing an order. Prior decisions of this Court, including W.P.(C) 13727/2024 (Neelgiri Machinery), have held that uploading SCNs under 'Additional Notices Tab' on the GST portal does not constitute effective service if the party is unaware of the notice. In such cases, remand for fresh adjudication after proper service and hearing was ordered.

Court's Interpretation and Reasoning: The Petitioner contended that the SCN dated 27th September 2023 was uploaded on the 'Additional Notices Tab', which did not come to their notice. Consequently, the impugned order dated 24th December 2023 was passed ex-parte without personal hearing or reply from the Petitioner.

The Court relied on its earlier decisions and similar judgments where orders passed without proper notice or hearing were set aside, and the matter remanded for fresh adjudication. It emphasized that the Department has since improved the portal to make SCNs more visible, but the present case concerns a notice issued prior to these changes.

Key Evidence and Findings: The absence of personal hearing and failure to provide the Petitioner with an opportunity to reply were critical findings. The Court accepted that the SCN was not effectively communicated.

Application of Law to Facts: The Court set aside the impugned demand orders and directed the Petitioner to file replies within 30 days. It mandated that future hearing notices be communicated not only by uploading on the portal but also via email and mobile communication to ensure effective service.

Treatment of Competing Arguments: While the Department argued that the SCN was uploaded on the portal, the Court found this insufficient as a mode of service in the circumstances of this case, aligning with prior rulings emphasizing the right to be heard.

Conclusion: The Court ordered fresh adjudication after proper service and hearing, setting aside the impugned orders.

Interim Relief and Pending Supreme Court Adjudication

The Court acknowledged the pendency of the Supreme Court's decision on the validity of the impugned notifications and directed that the present petition's challenge to the notifications be governed by the Supreme Court's outcome. It also noted that interim reliefs granted by other High Courts would continue to operate.

Furthermore, the Court proposed categorizing pending petitions and granting appropriate reliefs, including permitting parties to pursue appellate remedies without prejudicing the question of the notifications' validity.

3. SIGNIFICANT HOLDINGS

"Since the challenge to the above mentioned notifications 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."

"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 23rd 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."

"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."

Core principles established include:

• The necessity of prior recommendation by the GST Council under Section 168A for valid extension of limitation periods.
• The importance of effective service of show cause notices, including personal hearing opportunities, as fundamental to natural justice under the CGST Act.
• The recognition of conflicting High Court decisions and the primacy of the Supreme Court's ruling on the validity of notifications issued under Section 168A.
• The procedural safeguard that hearing notices must be communicated through accessible means beyond mere portal uploads, such as email and mobile communication.
• The remand of adjudication matters where procedural lapses in notice and hearing have occurred, ensuring fair opportunity to the affected party.

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