GST rectification application barred by limitation due to show cause notice uploaded without petitioner's knowledge, reply permitted

Delhi HC held that rectification application was barred by limitation where show cause notice was uploaded on additional notices tab without petitioner's knowledge. Following precedent in Neelgiri Machinery case, court permitted petitioner to file reply within one month despite procedural lapses. Adjudicating authority directed to pass order after hearing petitioner, subject to outcome of pending SLP in SC challenging the impugned notification under GST Act Section 168A.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

• The validity and legality of Notification No. 09/2023-Central Tax dated 31st March 2023 and related notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), particularly whether the proper procedure, including the prior recommendation of the GST Council, was followed before issuance.
• The effect of conflicting High Court decisions on the validity of these notifications and the ongoing Supreme Court proceedings regarding the same.
• The procedural fairness concerning the issuance and adjudication of show cause notices (SCNs) and demand orders, specifically whether the Petitioner had adequate notice and opportunity to respond, given that SCNs were uploaded under the "Additional Notices and Orders" tab on the GST portal, which was not readily visible to the Petitioner.
• The applicability of limitation periods and the validity of rectification applications filed after prescribed time limits.
• The appropriate relief and procedural course to be followed pending the Supreme Court's final adjudication on the validity of the impugned notifications.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Notification No. 09/2023-Central Tax and related notifications under Section 168A of the GST Act

The legal framework centers on Section 168A of the Central GST Act, which mandates that any extension of time limits for adjudication of show cause notices and passing of orders requires prior recommendation of the GST Council. The Petitioner challenged the impugned notification on grounds of procedural irregularity and non-compliance with this statutory requirement.

The Court noted that this issue is currently sub judice before the Supreme Court in S.L.P No. 4240/2025, involving similar notifications. Various High Courts have delivered conflicting judgments: the Allahabad and Patna High Courts upheld the validity of Notifications Nos. 9 and 56 of 2023, while the Guwahati High Court quashed Notification No. 56 of 2023. The Telangana High Court made observations on invalidity but did not conclusively decide the vires, and this matter is under Supreme Court consideration.

The Court refrained from expressing any opinion on the validity of the notifications, acknowledging the judicial discipline and the binding effect of the Supreme Court's forthcoming decision. The Punjab and Haryana High Court had similarly stayed proceedings pending Supreme Court adjudication, and this Court followed the same approach.

Issue 2: Procedural fairness in issuance and adjudication of show cause notices

The Petitioner contended that the show cause notice dated 26th September 2023 was uploaded on the GST portal under the "Additional Notices and Orders" tab, which was not prominently visible, resulting in the Petitioner not receiving actual notice and being unable to file replies or appear for hearings. This led to ex-parte orders and imposition of demands and penalties.

The Court relied on the precedent set in W.P.(C) 13727/2024 ('Neelgiri Machinery'), which dealt with a similar issue regarding the visibility of SCNs on the GST portal. The Court observed that the Department conceded the portal functions differently from the Department's side and the taxpayer's side, causing notices to be less visible to taxpayers.

Further reliance was placed on judgments in 'Satish Chand Mittal' and 'Anant Wire Industries', where under similar circumstances, matters were remanded to ensure fair opportunity to be heard. The Court emphasized the principle that orders should not be passed in default where there is ambiguity or lack of clarity in communication of notices.

Applying these precedents, the Court set aside the demand order dated 25th December 2023 and other impugned demand orders dated 23rd April 2024 and 5th December 2023. It directed that the Petitioner be given an opportunity to file replies within thirty days and that hearing notices be communicated not only by uploading on the portal but also by email to ensure actual notice.

Issue 3: Limitation and rectification application

The Petitioner's rectification application dated 15th February 2023 was noted to be barred by limitation. Nonetheless, the Department expressed willingness to consider it. The Court did not delve deeply into the merits of the rectification application but acknowledged its limitation-barred status and focused on ensuring procedural fairness in the ongoing adjudication process.

Issue 4: Relief pending Supreme Court decision

Given the pendency of the Supreme Court's decision on the validity of the impugned notifications, the Court adopted a pragmatic approach. It categorized pending cases and proposed that, without prejudging the validity of the notifications, Petitioners be afforded opportunity to place their stand before the adjudicating authorities. This approach balances the need to protect taxpayers' rights to be heard with the necessity to await authoritative determination of the legal validity of the notifications.

The Court ordered that the Petitioner be permitted to file replies to the show cause notices within thirty days, with personal hearings to be conducted via email communication. The adjudicating authority was directed to pass orders after hearing the Petitioner, subject to the outcome of the Supreme Court's decision in S.L.P No. 4240/2025.

3. SIGNIFICANT HOLDINGS

On the validity of the impugned notifications, the Court held:

"Since the challenge to the above mentioned notification 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."

On the procedural fairness regarding SCNs uploaded under the "Additional Notices and Orders" tab, the Court observed:

"The Department concedes that the portal works differently from the Department's side and the tax payer's side. Insofar as the Petitioner is concerned, the Department was not being able to view them on the Notices tab. The Petitioner, in support of its case, has placed on record the print out from the portal which shows that the same was viewable only on Additional notice and orders Tab and hence, may have been missed by the Petitioner."

Further, the Court reiterated the principle that:

"The 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."

Accordingly, the Court set aside the impugned demand orders and directed:

"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."

Core principles established include:

• The necessity of prior GST Council recommendation under Section 168A for extension notifications, pending authoritative Supreme Court ruling.
• The requirement of clear and effective communication of show cause notices to taxpayers, including ensuring visibility on the GST portal and supplementary email communication.
• The fundamental right of the taxpayer to be heard and to file replies before passing adjudication orders, especially where procedural ambiguities exist.
• The importance of judicial discipline in refraining from deciding issues currently before the Supreme Court and adopting interim relief measures to protect parties' rights.

Final determinations:

• The challenge to the validity of the impugned notifications is deferred to the Supreme Court's decision.
• Demand orders passed without proper notice and opportunity to be heard are set aside.
• The Petitioner is granted an opportunity to file replies and be heard through personal hearings facilitated by email communication.
• The adjudicating authority shall pass orders after hearing the Petitioner, subject to the Supreme Court's ruling.

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