Petitioner granted one month to file reply after SCN uploaded without knowledge, violating natural justice principles

Delhi HC disposed of petition challenging tax notifications, finding SCN was uploaded on Additional Tabs without petitioner's knowledge, violating natural justice principles. Court noted similar challenges pending before SC in HCC-SEW-MEIL-AAG JV case. Since SCN was uploaded before GST portal changes on 16th January 2024, petitioner granted one month to file reply. Court permitted petitioner opportunity to respond on merits rather than passing default orders. Final adjudication order made subject to outcome of pending SC proceedings on notification validity.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

• Whether the impugned Show Cause Notice (SCN) issued on 26th September 2023 was validly served upon the Petitioner, given that it was uploaded on the "Additional Notices" tab of the GST portal and allegedly remained outside the Petitioner's knowledge.
• The validity and legality of the impugned notifications Nos. 09/2023-Central Tax, 09/2023-State Tax, 56/2023-Central Tax, and 56/2023-State Tax issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), particularly regarding the extension of time limits for adjudication of SCNs and passing of orders.
• The procedural compliance required under Section 168A of the GST Act, specifically whether the notifications were issued following the prior recommendation of the GST Council.
• The implications of conflicting judicial opinions from various High Courts on the validity of the impugned notifications and the impact of pending Supreme Court proceedings on the adjudication of these issues.
• Whether the Petitioner was afforded a fair opportunity to respond to the SCN and participate in personal hearings before the passing of ex-parte orders.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Service of Show Cause Notice (SCN) Uploaded on "Additional Notices" Tab

Relevant Legal Framework and Precedents: The GST portal serves as the official platform for communication between the tax authorities and taxpayers. The principle of natural justice mandates that a notice must be brought to the knowledge of the affected party to enable a fair opportunity of hearing. The Court relied on the precedent set in W.P.(C) 13727/2024 titled 'Neelgiri Machinery Through Its Proprietor Mr. Anil Kumar v. Commissioner Delhi Goods And Service Tax And Others', which held that notices uploaded under the "Additional Notices & Orders" tab, which is not directly visible to taxpayers, do not constitute valid service.

Court's Interpretation and Reasoning: The Court observed that the SCN was uploaded on the "Additional Notices" tab, a category not conspicuous to the Petitioner. The Department conceded that the GST portal functions differently on the Department's side compared to the taxpayer's side, leading to discrepancies in visibility of notices. The Court emphasized that the intention of the law is to ensure that the Petitioner receives actual notice and is not prejudiced by portal design or technicalities.

Key Evidence and Findings: The Petitioner produced a printout from the portal demonstrating that the SCN was only visible under the "Additional Notices & Orders" tab. The Department's status report acknowledged the difference in portal views and that the notices were not adequately accessible to the Petitioner.

Application of Law to Facts: Given the lack of effective communication of the SCN, the Court set aside the impugned order dated 12th December 2023, which was passed ex-parte. The Court directed that the Petitioner be afforded an opportunity to file replies and be heard on merits.

Treatment of Competing Arguments: While the Department argued that the SCN was uploaded on the portal and thus served, the Court rejected this on the ground that mere upload under a less visible tab does not fulfill the requirement of effective service.

Conclusion: The Court held that the SCN was not validly served and remanded the matter for fresh adjudication after providing the Petitioner a fair opportunity to respond and be heard.

Issue 2: Validity and Legality of Impugned Notifications under Section 168A of the GST Act

Relevant Legal Framework and Precedents: Section 168A of the GST Act mandates that any extension of time limits for adjudication of SCNs and passing of orders must be preceded by a recommendation from the GST Council. The impugned notifications sought to extend such deadlines. The Court noted conflicting High Court decisions: Allahabad and Patna High Courts upheld the notifications, whereas the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court made observations on invalidity, which is currently under Supreme Court consideration in SLP No. 4240/2025.

Court's Interpretation and Reasoning: The Court acknowledged the ongoing judicial divergence and the pendency of the Supreme Court's decision on the matter. It refrained from expressing any opinion on the vires of the notifications, deferring to the Supreme Court's ultimate adjudication.

Key Evidence and Findings: The Court referred to the detailed orders and observations from various High Courts and the Supreme Court's interim order issuing notice and listing the matter for hearing, highlighting the cleavage of opinions.

Application of Law to Facts: The Court held that the challenge to the impugned notifications in the present petition would be subject to the outcome of the Supreme Court's decision. Meanwhile, the Court proposed to deal with the petitions on a prima facie basis, allowing procedural relief without delving into the validity of the notifications.

Treatment of Competing Arguments: The Petitioner challenged the notifications as invalid due to procedural irregularities and absence of GST Council recommendation prior to issuance. The Department relied on the notifications' purported validity. The Court balanced these by deferring substantive adjudication to the Supreme Court while ensuring procedural fairness to the Petitioner.

Conclusion: The Court reserved the question of validity of the impugned notifications for the Supreme Court and proceeded to grant interim relief to the Petitioner on procedural grounds.

Issue 3: Opportunity of Hearing and Fair Adjudication in Light of Ex-parte Orders

Relevant Legal Framework and Precedents: Principles of natural justice require that no order be passed without affording the affected party an opportunity to be heard. The Court referred to precedents including Satish Chand Mittal v. Sales Tax Officer and Anant Wire Industries v. Sales Tax Officers, where similar issues of non-communication of SCNs and personal hearing notices were addressed.

Court's Interpretation and Reasoning: The Court noted that the Petitioner was unable to file replies or avail personal hearings, resulting in ex-parte orders with huge demands and penalties. It emphasized the necessity of providing an opportunity to the Petitioner to respond and be heard before passing any order.

Key Evidence and Findings: The Court found that personal hearing notices were not effectively communicated and that the Petitioner's submissions were not considered due to the lack of knowledge of the SCN.

Application of Law to Facts: The Court set aside the demand orders dated 23rd April 2024 and 5th December 2023 and directed that the Petitioner be given a fresh opportunity to file replies within thirty days and be heard in personal hearings. It also mandated that hearing notices be communicated not only via the GST portal but also by email and mobile communication.

Treatment of Competing Arguments: The Department's reliance on portal upload as sufficient communication was rejected in favor of ensuring actual notice and hearing.

Conclusion: The Court ensured adherence to principles of natural justice by directing fresh proceedings with proper notice and hearing.

3. SIGNIFICANT HOLDINGS

The Court held:

"The SCN was uploaded on the Additional notices tab, following the decision in W.P.(C) 13727/2024 titled 'Neelgiri Machinery Through Its Proprietor Mr. Anil Kumar v. Commissioner Delhi Goods And Service Tax And Others', the order dated 12th December, 2023 is set aside."

"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 is given an opportunity to file its reply and is heard on merits and that orders are not passed in default."

"The impugned demand orders dated 23rd April, 2024 and 5th December, 2023 are accordingly set aside."

"The show cause notices shall be adjudicated in accordance with law."

"The adjudication order shall be subject to the outcome of the SLP pending in the Supreme Court, where the impugned notifications are challenged."

Core principles established include:

• Effective service of SCNs requires that notices be placed in a manner that is accessible and visible to the taxpayer, not merely uploaded on less conspicuous tabs.
• Natural justice mandates that no order be passed ex-parte without affording the affected party a fair opportunity to respond and be heard.
• The validity of notifications extending time limits under Section 168A of the GST Act must be preceded by GST Council recommendation and is subject to judicial scrutiny, with the Supreme Court having primacy in resolving conflicting High Court decisions.
• Interim relief can be granted on procedural grounds without prejudging the substantive validity of notifications under challenge.

Final determinations on the issues are:

• The impugned order dated 12th December 2023 is set aside for failure of proper service of the SCN.
• The impugned demand orders are quashed, and the Petitioner is granted a fresh opportunity to file replies and be heard.
• The challenge to the impugned notifications is deferred to the Supreme Court's final decision.
• Future hearing notices must be communicated through multiple channels including email and mobile to ensure effective notice.

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