Delhi HC ensures GST appeal adjudication on merits, directs portal access, leaves validity questions open

The Delhi HC disposed of a writ petition challenging show cause notices and orders under the CGST Act. The court directed that the Appellate Authority shall not dismiss the appeal on limitation grounds and must adjudicate on merits. The petitioner's access to the GST Portal must be ensured for accessing notices and documents. However, the court left open questions regarding validity of the impugned notification and Section 16(2)(c) of CGST Act, making the Appellate Authority's order subject to pending SC decisions in related matters.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

• The vires and validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act).
• The validity of Notification No. 56/2023-Central Tax dated 28th December, 2023 (impugned notification), particularly whether it was issued in accordance with the procedural requirements under Section 168A of the CGST Act.
• The legality of the extension of time limits for adjudication of show cause notices and passing of orders under Section 73 of the CGST Act and the corresponding State GST Acts, by virtue of the impugned notifications.
• The effect of the impugned Show Cause Notice dated 29th May, 2024 and the order dated 28th August, 2024 passed by the Sales Tax Officer.
• The procedural fairness in adjudication proceedings, including the opportunity to file replies and avail personal hearings, especially where ex-parte orders have been passed.
• The interplay between pending appeals under Section 107 of the CGST Act and the ongoing writ petitions challenging the impugned notifications and statutory provisions.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of Notification No. 56/2023-Central Tax and Compliance with Section 168A of the CGST Act

The legal framework governing the issuance of notifications extending time limits for adjudication under the CGST Act is Section 168A, which mandates prior recommendation of the GST Council before such notifications can be validly issued.

Several High Courts have taken divergent views on this issue: the Allahabad and Patna High Courts upheld the validity of Notification No. 56/2023, whereas the Guwahati High Court quashed it. The Telangana High Court observed invalidity but did not conclusively decide the issue. The Supreme Court has admitted a Special Leave Petition (SLP No. 4240/2025) to resolve this cleavage of opinion.

The Court noted that the impugned notification was challenged on the ground that it was issued without prior GST Council recommendation, and ratification was given only after issuance, contrary to the statutory mandate. The notification itself incorrectly stated that it was issued on the GST Council's recommendation.

Given the conflicting judicial precedents and the pendency of the matter before the Supreme Court, the Court refrained from expressing any opinion on the validity of the notification and observed that the outcome of the Supreme Court proceedings would be binding.

Validity of Section 16(2)(c) of the CGST Act

The challenge to Section 16(2)(c) of the CGST Act was also raised but is pending adjudication before the Court in a separate batch of matters (lead matter W.P.(C) 6293/2019). The Court accordingly refrained from deciding this issue in the present petition and left it open for determination in the separate proceedings.

Legality and Procedural Fairness of the Show Cause Notice and Adjudication Order

The petitioner challenged the impugned Show Cause Notice dated 29th May, 2024 and the order dated 28th August, 2024, contending that the adjudication was conducted ex-parte due to inability to file replies or avail personal hearings. This resulted in substantial demands and penalties being imposed without adequate opportunity to defend.

The Court observed that even if the impugned notifications are upheld, relief could still be granted by permitting the petitioners to place their case before the adjudicating authority. It recognized six categories of cases pending before it and indicated that orders could be passed affording an opportunity to the petitioners to present their stand, including pursuing appellate remedies.

In the present case, the petitioner had already filed an appeal under Section 107 of the CGST Act against the impugned order after paying the prescribed pre-deposit. The Court held that since the appeal was pending, interference with the impugned order at this stage was unwarranted.

Importantly, the Court directed that the appellate authority should not dismiss the appeal on limitation grounds and must adjudicate on merits. It also mandated that access to the GST Portal be ensured to the petitioner for accessing notices and related documents, thereby safeguarding procedural fairness.

Interim Orders and Judicial Discipline Pending Supreme Court Decision

The Court referred to interim orders passed by other High Courts, including Punjab and Haryana High Court, which had disposed of connected writ petitions subject to the final decision of the Supreme Court in the SLP concerning the notifications. The Court emphasized judicial discipline in refraining from expressing views on the vires of Section 168A and the impugned notifications while the Supreme Court's decision was awaited.

Application of Law to Facts and Treatment of Competing Arguments

The Court carefully balanced the competing interests: the statutory requirement for GST Council recommendation before issuing notifications extending limitation periods; the need for procedural fairness in adjudication; and the practical realities of pending appeals and ongoing litigation.

While acknowledging the serious challenges to the validity of the impugned notification and Section 16(2)(c), the Court declined to decide these issues prematurely due to their pendency before higher forums. Instead, it focused on ensuring that petitioners were not prejudiced by procedural lapses and had access to appellate remedies.

3. SIGNIFICANT HOLDINGS

The Court held that:

• "Considering the fact that the appeal against the impugned order has already been filed, the Court is of the opinion that the impugned order does not warrant interference at this stage. Accordingly, the Petitioner is free to pursue the appeal in accordance with law."
• "The Appellate Authority shall not dismiss the appeal on the ground of limitation and adjudicate the same on merits."
• "All the rights and remedies of the parties are left open. Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable access to the notices and related documents."
• "The issues in respect of the validity of (i) the impugned notification and (ii) Section 16 (2) (c) of CGST Act are left open and the order of the Appellate Authority shall be subject to the outcome of the decision of (i) The Supreme Court in S.L.P No 4240/2025 and (ii) This Court in W.P.(C) 6293/2019."

The Court established the core principle that where fundamental questions of statutory validity are pending before the Supreme Court, subordinate courts should exercise restraint and avoid premature adjudication, while ensuring procedural fairness and protection of parties' rights through available appellate mechanisms.

Further, the Court underscored the requirement that notifications extending limitation periods under the CGST Act must comply with the procedural mandate of prior GST Council recommendation under Section 168A, a question now pending final determination by the Supreme Court.

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