Delhi HC permits belated appeal under Section 107 CGST Act 2017 with pre-deposit by July 10, 2025

Delhi HC allowed petitioner to file belated appeal under Section 107 of CGST Act, 2017 by 10th July, 2025 with pre-deposit, despite procedural challenges regarding extension of time limit for SCN issuance and validity of notifications. Court found petitioner had filed reply, appeared through accountant, and received reasoned order, satisfying natural justice principles. Appeal will be heard on merits if filed within stipulated time. Validity of impugned notifications remains open, subject to SC decision in related matter.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court include:

• Whether the Show Cause Notice (SCN) dated 24th September, 2023 issued by the Sales Tax Officer and the consequent adjudication order dated 30th December, 2023 are valid and sustainable.
• The vires and validity of Notification No. 56/2023-Central Tax dated 28th December, 2023 and Notification No. 9/2023-Central Tax dated 31st March, 2023, issued purportedly under Section 168A of the Central Goods and Services Tax Act, 2017 (CGST Act).
• Whether the procedure prescribed under Section 168A of the CGST Act, including prior recommendation of the GST Council, was followed before issuance of the impugned notifications extending the time limit for adjudication under Section 73 of the CGST Act.
• The effect of the pendency of the challenge to the notifications before the Supreme Court on the proceedings before the High Court and the adjudicating authorities.
• Whether the petitioner was afforded adequate opportunity to file replies and avail personal hearings before passing ex-parte orders imposing tax, interest, and penalty.
• The permissibility of allowing belated appeals against the impugned adjudication order under Section 107 of the CGST Act.

2. ISSUE-WISE DETAILED ANALYSIS

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

Relevant legal framework and precedents: Section 168A of the CGST Act empowers the government to extend the time limit for adjudication of show cause notices and passing of orders under Section 73, subject to prior recommendation of the GST Council. The impugned Notifications Nos. 9 and 56 of 2023 purportedly extend the limitation period for adjudication for the financial year 2019-2020.

Several High Courts have taken divergent views on the validity of 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 expressed reservations regarding Notification No. 56 without deciding its validity, and this issue is presently under consideration before the Supreme Court in S.L.P No. 4240/2025.

The Supreme Court has issued notice and is considering whether the time limit for adjudication under Section 73 of the CGST Act and the corresponding SGST Act could be extended by issuing such notifications under Section 168A. The Supreme Court has acknowledged the cleavage of opinion among High Courts and is yet to deliver a final verdict.

Court's interpretation and reasoning: The Delhi High Court noted the ongoing litigation and conflicting judicial opinions on the validity of the impugned notifications. It observed that since the Supreme Court is seized of the matter, the question of validity must await the Supreme Court's decision. The Court refrained from expressing any opinion on the vires of the notifications and deferred to the higher forum's adjudication.

Application of law to facts: The Court recognized that the impugned notifications are challenged on procedural grounds, specifically the absence of prior GST Council recommendation before issuance, and the timing of ratification. The Court also noted the interim orders passed by other High Courts and the Supreme Court's ongoing consideration.

Treatment of competing arguments: The Court acknowledged the petitioners' challenge to the notifications but balanced it against the principle of judicial discipline and the need to avoid conflicting rulings while the Supreme Court's decision is awaited. The Court also considered interim orders passed by other High Courts and the Supreme Court's directions.

Conclusion: The Court held that the validity of the impugned notifications is a matter pending before the Supreme Court and must be decided by it. Accordingly, the Court left the issue open and subject to the Supreme Court's final determination.

Validity of the Show Cause Notice and Adjudication Order

Relevant legal framework: Section 73 of the CGST Act deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized. The procedure requires issuance of a show cause notice, opportunity to reply, and personal hearing before passing an order.

Key evidence and findings: The petitioner challenged the SCN dated 24th September, 2023 on the ground that the date for filing the reply was also fixed as 24th September, 2023, effectively denying a reasonable opportunity to respond. However, the record showed that the petitioner filed a reply on 28th October, 2023 and relied on various documents. Further, the petitioner's accountant appeared on 24th December, 2023. The adjudicating authority also issued reminders and provided opportunities for personal hearing.

Court's interpretation and reasoning: The Court examined the impugned order passed by the Sales Tax Officer, which was reasoned and detailed. The order noted that the petitioner's reply was considered but rejected due to lack of supporting documents concerning blocked input tax credit under Section 17(5) and ITC claimed from cancelled suppliers or suppliers who had not filed GSTR-3B returns, which is impermissible under Section 16 of the CGST Act. The order also noted multiple opportunities given to the petitioner, including reminders and chances for personal hearing, which were not adequately availed.

Application of law to facts: The Court found that the adjudicating authority complied with the procedural requirements under the CGST Act. Despite opportunities, the petitioner failed to submit a satisfactory reply supported by relevant documents. The adjudication order was thus validly passed under Section 73(9) of the CGST Act.

Treatment of competing arguments: The petitioner argued that they were denied adequate opportunity due to the flawed SCN date and inability to avail personal hearings. The Court acknowledged these submissions but found that the petitioner had, in fact, filed replies and appeared through an accountant. The Court also noted that the adjudicating authority had issued reminders and provided chances for hearings, which the petitioner did not fully utilize.

Conclusion: The Court upheld the validity of the SCN and the consequent adjudication order, finding no procedural infirmity warranting quashing of the order.

Relief in the form of belated appeal

Relevant legal framework: Section 107 of the CGST Act provides for appeals against orders passed under the Act. The limitation period for filing appeals is prescribed, but courts have discretion to condone delay in appropriate cases.

Court's reasoning and conclusion: Considering the circumstances, including the petitioner's inability to file replies timely and the complexity arising from the challenge to the notifications, the Court found it appropriate to permit the petitioner to file a belated appeal against the impugned order. The Court directed that the appeal be filed by 10th July, 2025 with pre-deposit and assured that such appeal would not be dismissed on the ground of limitation but would be heard on merits.

Effect of Supreme Court proceedings on current adjudication

The Court emphasized that any order passed by the adjudicating authority or appellate forum shall be subject to the final outcome of the Supreme Court's decision in S.L.P No. 4240/2025, which is considering the validity of the impugned notifications. This preserves the rights of the parties and avoids conflicting outcomes pending the apex court's ruling.

3. SIGNIFICANT HOLDINGS

"The validity of the impugned notifications is a matter pending before the Supreme Court and must be decided by it. Accordingly, the issue is left open and subject to the Supreme Court's final determination."

"Sufficient and repeated opportunities have been given to the taxpayer but neither satisfactory reply has been submitted by the taxpayer nor any AR present before the proper officer on the date fixed for personal hearing. In view of aforementioned circumstance, undersigned is left with no other option to proceed on the basis of information available and reply submitted by the taxpayer."

"Let an appeal be filed by 10th July, 2025 with pre-deposit. If the same is filed within the stipulated date, it would not be dismissed on ground of limitation and the same shall be heard on merits."

Core principles established include:

• The procedural safeguards under the CGST Act, including issuance of SCN, opportunity to reply, and personal hearing, are mandatory and must be complied with before passing an order.
• Extension of limitation periods under Section 168A of the CGST Act requires strict compliance with procedural mandates, including prior GST Council recommendation.
• Judicial discipline requires lower courts and tribunals to defer to the Supreme Court on issues pending before it, especially where there is a division of opinion among High Courts.
• Belated appeals may be permitted in appropriate cases to ensure justice, especially where procedural complexities or ongoing litigation affect the parties' ability to file timely appeals.

Final determinations on each issue are:

• The validity of the impugned notifications is left open pending Supreme Court's decision.
• The SCN and adjudication order are validly passed with adequate opportunity afforded to the petitioner.
• The petitioner is permitted to file a belated appeal against the adjudication order, which shall be heard on merits.

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