Adjudication order set aside for natural justice violation when show cause notice hidden in additional notices tab

Delhi HC set aside adjudication order and notifications dated March 31, 2023 and December 28, 2023 issued by Central Board of Indirect Taxes and Customs due to violation of natural justice principles. Petitioner claimed show cause notice was not brought to their knowledge as it was uploaded in 'Additional Notices Tab' making it invisible to parties. Following precedent in Neelgiri Machinery case involving similar circumstances, HC remanded matter to adjudicating authority for fresh hearing. Petitioner granted 30 days to file reply. Petition disposed.

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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 6th December 2023 and the consequent adjudication order dated 18th April 2024 under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) were validly issued and passed, particularly in light of procedural fairness and opportunity of hearing.
• The validity and legality of Notification Nos. 09/2023-Central Tax dated 31st March 2023 and 56/2023-Central Tax dated 28th December 2023 issued by the Central Board of Indirect Taxes and Customs (CBIC) under Section 168A of the CGST Act, which purportedly extended the time limits for adjudication of SCNs and passing of orders.
• Whether the procedure mandated under Section 168A of the CGST Act, including prior recommendation of the GST Council, was complied with in issuing the impugned notifications.
• The impact of the ongoing judicial scrutiny and conflicting High Court decisions on the validity of these notifications, including the effect of the Supreme Court's pending Special Leave Petition (SLP) on the present proceedings.
• The procedural issue concerning the manner of communication of the SCN and hearing notices to the Petitioner, specifically whether uploading the SCN under the 'Additional Notices Tab' on the GST portal without adequate notice to the Petitioner violated principles of natural justice.
• The appropriate relief and procedural direction in cases where adjudication orders have been passed ex-parte due to non-receipt or non-awareness of SCNs and hearing notices.

2. ISSUE-WISE DETAILED ANALYSIS

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

Relevant legal framework and precedents: Section 168A of the CGST Act empowers the Central Government to extend the time limits for adjudication of SCNs and passing of orders beyond the statutory period, subject to the prior recommendation of the GST Council. The notifications under challenge purportedly extend these time limits for the tax period April 2018 to March 2019 and subsequent periods.

Several High Courts have delivered conflicting judgments on the validity of these notifications. The Allahabad High Court upheld Notification No. 9/2023, while the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Patna High Court upheld Notification No. 56/2023. The Telangana High Court expressed reservations about the validity of Notification No. 56/2023 but did not conclusively rule on its vires. This conflicting judicial landscape has necessitated intervention by the Supreme Court.

The Supreme Court, in SLP No. 4240/2025, has issued notice and is considering whether the time limits for adjudication under Section 73 of the CGST Act and the corresponding State GST Act could be extended by the impugned notifications. The Supreme Court recognized the cleavage of opinion among High Courts and has stayed the matter for final adjudication.

Court's interpretation and reasoning: The Delhi High Court acknowledges the ongoing Supreme Court proceedings and the divergent High Court rulings. It refrains from expressing any opinion on the validity of the impugned notifications, deferring to the Supreme Court's ultimate decision. The Court also notes that the challenge to the notifications is part of a batch of petitions, with the lead matter being heard extensively.

Application of law to facts: Given the pendency of the Supreme Court's decision and the conflicting views, the Delhi High Court holds that the challenge to the impugned notifications must be subject to the outcome of the Supreme Court proceedings. The Court directs that the adjudication orders passed pursuant to these notifications be considered in light of the Supreme Court's final ruling.

Treatment of competing arguments: The Court records the submissions of the parties challenging the notifications on procedural grounds, including non-compliance with Section 168A's requirement of prior GST Council recommendation. The Court also notes the Government's reliance on the notifications to extend limitation periods. However, the Court does not resolve these disputes at this stage, leaving them open for the Supreme Court's determination.

Conclusions: The validity of the impugned notifications remains an open question pending the Supreme Court's decision. The Delhi High Court defers to the higher forum and refrains from adjudicating on this issue.

b) Validity of the Show Cause Notice and Adjudication Order - Procedural Fairness and Opportunity to be Heard

Relevant legal framework and precedents: Principles of natural justice and procedural fairness require that a party be given adequate notice of proceedings, an opportunity to file replies, and a personal hearing before adverse orders are passed. The CGST Act and allied procedural rules mandate issuance of SCNs and personal hearings before passing orders under Section 73.

Recent decisions of the Delhi High Court have addressed issues arising from the GST portal's practice of uploading notices under an 'Additional Notices & Orders' tab, which was not prominently visible to taxpayers, resulting in non-receipt of SCNs and consequent ex-parte orders. The Court in W.P.(C) 13727/2024 (Neelgiri Machinery) and other similar cases held that such procedural irregularities vitiate the adjudication process and remanded the matters for fresh adjudication after providing an opportunity to be heard.

Court's interpretation and reasoning: The Court finds that the SCN dated 6th December 2023 was uploaded under the 'Additional Notices Tab', and as a result, the Petitioner did not come to know of the notice. Consequently, the impugned order dated 18th April 2024 was passed without affording the Petitioner a personal hearing or an opportunity to file a reply. This violates the principles of natural justice.

The Court relies on its own precedent and similar decisions to hold that orders passed in default due to non-receipt or non-awareness of SCNs must be set aside and the matter remanded for fresh adjudication.

Key evidence and findings: The Court notes that post 17th January 2024, the Department has made changes to the GST portal to ensure SCNs are more visible and accessible to taxpayers. However, the SCN in the present case predates these changes. The Petitioner's inability to access the notice and the absence of personal hearing are critical findings.

Application of law to facts: Applying the principles of natural justice and the precedents, the Court sets aside the impugned demand orders dated 23rd April 2024 and 5th December 2023. It directs the Petitioner to file replies within thirty days and mandates that hearing notices shall not merely be uploaded but also communicated by email and phone to ensure actual notice.

Treatment of competing arguments: While the Department may argue that the notices were uploaded on the portal, the Court emphasizes that mere uploading under a less visible tab does not satisfy the requirement of effective notice. The Court prioritizes ensuring fairness over procedural technicalities that result in prejudice to the Petitioner.

Conclusions: The adjudication order is quashed, and the matter is remanded for fresh consideration after affording the Petitioner a genuine opportunity to be heard. The Court prescribes procedural safeguards for communication of notices going forward.

c) Effect of Pending Supreme Court Proceedings on the Present Petition

Relevant legal framework and precedents: When a matter involving identical or similar questions of law is pending before the Supreme Court, lower courts generally refrain from expressing final views to maintain judicial discipline and avoid conflicting judgments.

Court's interpretation and reasoning: The Court notes that the Punjab and Haryana High Court has disposed of connected petitions with interim orders, deferring to the Supreme Court's forthcoming judgment. The Delhi High Court follows suit, acknowledging that the issue of the validity of Section 168A and the impugned notifications is sub judice before the Supreme Court.

Application of law to facts: The Court holds that the present petition challenging the notifications shall be subject to the Supreme Court's decision in SLP No. 4240/2025. The Court refrains from adjudicating on the vires of the notifications and confines itself to procedural issues and interim reliefs.

Conclusions: The Court's order is expressly made subject to the Supreme Court's ultimate determination on the validity of the impugned notifications.

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."

"Let the entire matter be considered afresh and an order be passed on merits after duly considering the reply and the submissions made by the Petitioner in the personal hearing."

Core principles established include:

• The necessity of prior GST Council recommendation under Section 168A for valid extension of time limits via notifications, a matter pending final adjudication by the Supreme Court.
• Adherence to principles of natural justice requiring effective communication of SCNs and hearing notices, including personal hearings before passing orders under the CGST Act.
• Remedying procedural lapses by setting aside ex-parte orders and remanding matters for fresh adjudication with proper notice and opportunity to be heard.
• Judicial restraint in adjudicating on issues sub judice before the Supreme Court, deferring to the apex court's authoritative pronouncement.

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