Adjudicating Authority must grant proper hearing opportunity before issuing orders under sections 73/74

Delhi HC set aside the impugned order and remanded the matter to the Adjudicating Authority after finding that the petitioner was not granted proper opportunity to be heard regarding SCN issued under sections 73/74. The court left open the validity question of Notification No. 56/2023-Central Tax and directed that any future order would be subject to the SC's decision in M/s HCC-SEW-MEIL-AAG JV case. The petitioner was granted time until 10th July 2025 to file reply, with GST Portal access to be ensured for document filing.

---

---

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

• Whether the Show Cause Notice dated 4th December 2023 and the consequent adjudication order dated 6th April 2024 passed by the Sales Tax Officer are legally valid and sustainable.
• The vires of Notification No. 56/2023-Central Tax dated 28th December 2023, particularly whether it was issued in accordance with the procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act).
• Whether the extension of time limits for adjudication under Section 73 of the GST Act and the corresponding State GST Act for the financial year 2019-2020 could be validly effected by the impugned notifications issued under Section 168A of the GST Act.
• The procedural fairness in the adjudication process, specifically whether the Petitioner was afforded a proper opportunity of personal hearing and whether replies filed by the Petitioner were duly considered.
• The impact of ongoing proceedings before the Supreme Court challenging the validity of the impugned notifications on the present matter.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Impugned Notifications under Section 168A of the GST Act

The impugned Notification No. 56/2023-Central Tax, which purportedly extended the time limit for adjudication of show cause notices and passing of orders under Section 73 of the GST Act, was challenged on the ground that it was issued without prior recommendation of the GST Council, contrary to the mandatory requirement under Section 168A. The notification incorrectly stated that it was issued on the recommendation of the GST Council, whereas ratification was given only subsequent to issuance.

The Court noted that this issue was already under consideration in a batch of petitions before the Court, with the lead case involving similar challenges. The Court referred to the judicial landscape where various High Courts had taken divergent views: the Allahabad and Patna High Courts upheld the validity of the impugned notifications, while the Guwahati High Court quashed Notification No. 56/2023 (Central Tax). The Telangana High Court had expressed reservations about the validity but did not conclusively decide on it.

Importantly, the Supreme Court had admitted a Special Leave Petition (SLP No. 4240/2025) concerning these notifications and had issued notice with interim directions, recognizing the cleavage of opinion among High Courts. The Supreme Court was to decide if the time limits for adjudication under Section 73 of the GST Act could be extended by notifications issued under Section 168A.

The Court observed that the Punjab and Haryana High Court had refrained from expressing an opinion on the vires of Section 168A and the impugned notifications, deferring to the Supreme Court's forthcoming decision and directing that interim orders continue.

Thus, the Court acknowledged that the question of validity of the impugned notifications is a live and sub judice issue before the Supreme Court, and no final determination could be made in the present petition without awaiting the apex court's ruling.

Procedural Fairness in Adjudication and Opportunity to be Heard

Separately from the vires challenge, the Petitioner contended that the impugned adjudication order suffered from legal infirmities as it failed to consider the reply filed by the Petitioner and did not grant a proper personal hearing. The Petitioner argued that the adjudication orders were passed ex-parte, resulting in substantial demands and penalties without affording adequate opportunity to present their case.

The Court examined these contentions and found merit in the grievance regarding denial of proper opportunity of hearing and non-consideration of the Petitioner's reply. It emphasized the fundamental principle of natural justice that a party must be heard before adverse orders are passed.

Accordingly, the Court held that the matter deserved to be remanded to the adjudicating authority for fresh consideration. The Petitioner was directed to file a reply by 10th July 2025, and a personal hearing was to be granted. The Court also mandated that notices for the hearing be sent to the Petitioner's counsel's email address to ensure communication.

The Court further ordered that access to the GST Portal must be provided to the Petitioner if not already available, to enable filing of replies and access to relevant notices and documents, thereby safeguarding procedural rights.

Impact of Pending Supreme Court Proceedings

The Court explicitly refrained from expressing any opinion on the validity of the impugned notifications, leaving that issue open for the Supreme Court's final adjudication. It clarified that any order passed by the adjudicating authority on remand would be subject to the outcome of the Supreme Court's decision in SLP No. 4240/2025.

The Court also noted the interim orders passed by other High Courts and the Supreme Court's directions, underscoring the need for judicial discipline and consistency pending the apex court's ruling.

3. SIGNIFICANT HOLDINGS

The Court's key legal reasoning and determinations include the following:

"The validity of the impugned notifications 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."

"Considering the fact that the Petitioner has not been granted a proper opportunity to be heard, in the opinion of the Court, the matter deserves to be remanded back to the concerned Adjudicating Authority."

"Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable filing of reply and access to the notices and related documents."

Core principles established or reaffirmed by the Court include:

• The procedural requirement under Section 168A of the GST Act for prior recommendation of the GST Council before issuance of notifications extending time limits is a substantive legal issue pending final determination by the Supreme Court.
• In tax adjudication proceedings, the principles of natural justice require that the affected party be given a proper opportunity to file replies and be heard personally before adverse orders are passed.
• Pending the Supreme Court's decision on the validity of the impugned notifications, adjudicating authorities should proceed cautiously, ensuring procedural fairness without prejudging the substantive validity of the notifications.
• Judicial discipline mandates that lower courts and tribunals defer to the Supreme Court's forthcoming ruling on issues where there is a divergence of opinion among High Courts.

Final determinations on each issue:

• The challenge to the validity of Notification No. 56/2023-Central Tax was not decided on merits and was left open for the Supreme Court's adjudication.
• The impugned adjudication order was set aside on grounds of procedural infirmity, specifically denial of proper hearing and non-consideration of replies.
• The matter was remanded to the adjudicating authority for fresh adjudication after affording the Petitioner a proper opportunity to be heard and file replies.
• All rights and remedies of the parties were preserved, and interim reliefs were granted to ensure access to procedural mechanisms like the GST Portal.

---