GST registration cancellation set aside due to denial of hearing opportunity, fresh proceedings ordered with restored portal access

Delhi HC set aside an order canceling GST registration retrospectively, finding the petitioner was denied opportunity to be heard before the SCN and consequent order were passed. The court directed the Adjudicating Authority to consider petitioner's reply and conduct fresh proceedings with proper hearing. GST Portal access was ordered to be restored for uploading replies and accessing notices. The validity of the relevant GST notifications was left open, subject to pending SC decision in HCC-SEW-MEIL-AAG JV case. All rights and remedies of parties were preserved.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in the judgment are:

• Whether the show cause notice (SCN) dated 28th May 2024 and the consequent order dated 6th August 2024, issued by the State Goods and Service Tax Department, are valid and maintainable.
• The vires (validity) of Notification No. 9/2023-Central Tax dated 31st March 2023 and Notification No. 56/2023-Central Tax dated 28th December 2023, issued under Section 168A of the Central Goods and Services Tax Act, 2017, particularly regarding the extension of time limits for adjudication under the GST regime.
• Whether the procedural requirements under Section 168A, including prior recommendation of the GST Council, were complied with in issuing the impugned notifications.
• Whether the Petitioner was afforded a fair opportunity of hearing, including access to the GST portal and personal hearing, before passing the impugned adjudication order.
• The impact of ongoing proceedings and conflicting High Court decisions on the validity of the impugned notifications and related orders.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Impugned Notifications (Nos. 9/2023 and 56/2023-Central Tax)

Relevant legal framework and precedents: The notifications were issued under Section 168A of the Central Goods and Services Tax Act, 2017, which mandates that any extension of time limits for adjudication of show cause notices requires prior recommendation of the GST Council. The challenge was that Notification No. 56/2023 was issued without such prior recommendation, and ratification was given only post issuance.

Various High Courts have delivered conflicting judgments on these notifications: the Allahabad High Court upheld Notification No. 9, the Patna High Court upheld Notification No. 56, while the Guwahati High Court quashed Notification No. 56. The Telangana High Court observed invalidity of Notification No. 56 but did not decide on its vires. This conflicting judicial landscape is currently under consideration by the Supreme Court in S.L.P No. 4240/2025.

Court's interpretation and reasoning: The Delhi High Court acknowledged these conflicting views and the pendency of the Supreme Court's adjudication. It refrained from expressing a definitive opinion on the validity of the notifications, deferring to the Supreme Court's forthcoming decision. The Court noted that the notifications purportedly extend the time limits for adjudication under Section 73 of the GST Act and SGST Act, but the legality of such extensions is under challenge.

Application of law to facts: Given the pendency of the Supreme Court matter and the judicial divergence, the Court adopted a cautious approach, holding that the validity of the impugned notifications would be subject to the Supreme Court's final decision.

Treatment of competing arguments: The Court recognized the arguments challenging the procedural compliance under Section 168A and the conflicting judicial pronouncements. It also noted interim orders passed by other High Courts and the Supreme Court's issuance of notice in the matter.

Conclusions: The Court left the issue of validity of the impugned notifications open, pending the Supreme Court's ruling, and directed that any orders passed by adjudicating authorities would be subject to that outcome.

Validity and Service of Show Cause Notice and Opportunity of Hearing

Relevant legal framework and precedents: Principles of natural justice require that a party must be given a fair opportunity to be heard before any adverse order is passed. Access to relevant portals and documents is essential to enable a party to respond to show cause notices and participate in adjudication proceedings.

Key evidence and findings: The Petitioner's GST registration was cancelled retrospectively with effect from 1st July 2017, by an order dated 26th October 2020. Due to this cancellation, the Petitioner had no access to their GST portal and thus did not receive or have knowledge of the SCN dated 28th May 2024 or subsequent proceedings. Consequently, the Petitioner was unable to file replies or participate in personal hearings. The impugned adjudication order was passed ex-parte and was non-speaking.

Court's interpretation and reasoning: The Court found that the Petitioner was denied a fundamental opportunity to be heard, which is a violation of principles of natural justice. The absence of access to the GST portal and failure to provide personal hearing rendered the impugned order unsustainable.

Application of law to facts: The Court set aside the impugned order and directed that the Petitioner be granted a fresh opportunity to file a reply to the SCN and be heard through personal hearing. The Court mandated that the Adjudicating Authority issue a notice for personal hearing and duly consider the Petitioner's submissions before passing a fresh order.

Treatment of competing arguments: The Respondents did not dispute the lack of access or hearing opportunity; the Court emphasized that even if the notifications were valid, procedural fairness must be ensured.

Conclusions: The impugned order was quashed, and the Petitioner was granted time till 10th July 2025 to file a reply. The Adjudicating Authority was directed to provide personal hearing and pass a fresh speaking order after considering the Petitioner's submissions.

Effect of Pending Supreme Court Proceedings and Interim Orders

Relevant legal framework and precedents: The principle of judicial discipline requires lower courts to respect the decisions and pending proceedings of higher courts. Interim orders and pending appeals before the Supreme Court affect the treatment of related matters in subordinate courts.

Court's interpretation and reasoning: The Court noted that several High Courts had stayed or disposed of petitions subject to the Supreme Court's decision in S.L.P No. 4240/2025. It observed that judicial discipline mandates deferring to the Supreme Court's final ruling on the validity of the impugned notifications.

Application of law to facts: The Court disposed of the writ petition subject to the Supreme Court's outcome and left all rights and remedies open to the parties. It also directed that access to the GST portal be restored to the Petitioner to enable compliance with procedural requirements.

Treatment of competing arguments: The Court balanced the interests of the parties by allowing procedural fairness without prejudging the substantive validity of the notifications under challenge.

Conclusions: The Court's order preserves the status quo pending the Supreme Court's decision and ensures procedural fairness in the interim.

3. SIGNIFICANT HOLDINGS

"This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCN and the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner to contest the matter on merits."

"The impugned order is set aside. The Petitioner is granted time till 10th July 2025, to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner."

"However, it is made clear that the issue in respect of the validity of the impugned notification is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court in S.L.P No 4240/2025."

Core principles established include:

• The necessity of compliance with procedural fairness, including access to portals and personal hearings, before passing adjudication orders under GST law.
• The requirement that extensions of limitation periods under GST must comply with Section 168A, including prior GST Council recommendation, failing which their validity is questionable.
• Judicial restraint in adjudicating on the validity of notifications pending Supreme Court determination, while ensuring interim procedural safeguards.

Final determinations on each issue are that the impugned adjudication order is quashed for lack of hearing, the Petitioner is granted opportunity to respond, and the validity of the impugned notifications remains undecided pending Supreme Court ruling. The Petitioner's rights to appeal and remedies are preserved, and access to the GST portal must be restored to enable compliance.

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