Delhi HC allows fresh reply opportunity after adjudication ignored petitioner's response to GST show cause notices for GSTR-9 clerical errors

Delhi HC set aside the impugned order in a GST matter involving SCN challenges. The court found that petitioner's reply was not considered during adjudication of show cause notices related to clerical errors in Form GSTR-9 filing. HC granted petitioner opportunity to contest on merits, allowing time until 10th July 2025 to file fresh reply with supporting documents. Adjudicating Authority directed to provide personal hearing notice upon reply submission. Petition disposed of with relief granted to petitioner.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

• Whether the show cause notice dated 1st December, 2023 and the consequent order dated 27th April, 2024 issued by the Sales Tax Officer under the GST regime for the financial year 2018-19 are legally sustainable.
• The validity and vires of Notification No. 09/2023-Central Tax dated 31st March, 2023, particularly in light of procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act).
• Whether the adjudicating authority erred in passing the impugned order without considering the reply filed by the Petitioner.
• The procedural fairness and the opportunity of personal hearing afforded to the Petitioner in the adjudication process.
• The impact of ongoing judicial scrutiny of the impugned notifications by various High Courts and the Supreme Court on the present proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Impugned Notifications (Notification No. 09/2023-Central Tax and Notification No. 56/2023-Central Tax)

Relevant legal framework and precedents: The impugned notifications were issued purportedly under Section 168A of the GST Act, which mandates that any extension of the time limit for adjudication of show cause notices and passing of orders requires prior recommendation of the GST Council. This procedural requirement has been challenged on the ground that the notifications were issued without following the proper procedure, particularly regarding the timing and ratification of the GST Council's recommendation.

Several High Courts have adjudicated on the validity of these notifications with conflicting outcomes: the Allahabad High Court upheld Notification No. 9; the Patna High Court upheld Notification No. 56; whereas the Guwahati High Court quashed Notification No. 56 of 2023 (Central Tax). The Telangana High Court observed invalidity of Notification No. 56 without delving into the vires, and this issue is presently before the Supreme Court in S.L.P No. 4240/2025.

Court's interpretation and reasoning: The Court acknowledged the conflicting judicial opinions and noted that the ultimate determination of the validity of the impugned notifications is pending before the Supreme Court. The Court refrained from expressing any definitive view on the validity of the notifications, respecting judicial discipline and the pendency of the matter at the apex court level.

Application of law to facts: Since the notifications are under judicial scrutiny, the Court observed that the adjudication in the present case would be subject to the outcome of the Supreme Court's decision. Interim reliefs and procedural directions were considered in light of this uncertainty.

Treatment of competing arguments: The Petitioner challenged the notifications' validity, while the Respondent relied on their purported validity and the procedural compliance. The Court balanced these by deferring substantive adjudication on validity and focusing on procedural fairness in the present case.

Conclusions: The Court left the question of validity open, subject to the Supreme Court's final ruling, and proceeded to address the procedural fairness in the impugned order.

Procedural Fairness and Consideration of the Reply Filed by the Petitioner

Relevant legal framework and precedents: Principles of natural justice require that a party be given an opportunity to be heard and that their submissions be duly considered before an adverse order is passed. The GST adjudication process mandates issuance of show cause notices, opportunity for reply, personal hearings, and reasoned orders.

Court's interpretation and reasoning: The Petitioner filed a detailed reply to the SCN dated 31st December, 2023, which included the contention that the issue arose from a clerical error in filing Form GSTR-9. Despite this, the impugned order dated 27th April, 2024 was passed without considering the Petitioner's reply and in the absence of the Petitioner at the personal hearing scheduled on 28th March, 2024.

The Court observed that the adjudicating authority noted in the impugned order that the reply was "not satisfactory" and that "no relevant document has been uploaded/submitted." However, the Petitioner contended that the reply had been filed and the personal hearing opportunity was not availed due to various reasons.

Key evidence and findings: The Court examined the chronology of events, including the issuance of the SCN, filing of the reply, scheduling of the personal hearing, non-attendance by the Petitioner, passing of the impugned order, and rejection of the rectification application.

Application of law to facts: The Court found that since the reply filed by the Petitioner was not considered while passing the impugned order, the principles of natural justice were violated. The Court emphasized the need for an opportunity to contest the matter on merits.

Treatment of competing arguments: The Respondent argued that the reply was unsatisfactory and the Petitioner failed to attend the personal hearing. The Petitioner argued that the reply was filed and the personal hearing was missed due to unavoidable reasons. The Court balanced these by ordering a fresh opportunity for the Petitioner to file a reply and be heard.

Conclusions: The Court set aside the impugned order and directed the adjudicating authority to provide the Petitioner with an opportunity to file a fresh reply with supporting documents, issue a fresh notice for personal hearing, and consider the submissions before passing a fresh order.

Impact of Pending Supreme Court Proceedings on Present Adjudication

Relevant legal framework and precedents: Judicial discipline and the doctrine of precedent require lower courts to respect the decisions of higher courts and refrain from deciding issues pending before the Supreme Court.

Court's interpretation and reasoning: The Court noted that the Supreme Court had issued notice in S.L.P No. 4240/2025 concerning the validity of the impugned notifications and that several High Courts had taken divergent views. The Court acknowledged that the ultimate determination of the notifications' validity would be binding on all subordinate courts.

Application of law to facts: In light of the pending Supreme Court proceedings, the Court disposed of the present petition with the direction that any fresh order passed by the adjudicating authority shall be subject to the Supreme Court's decision.

Treatment of competing arguments: The parties sought interim relief and clarity on the applicability of the notifications. The Court balanced the need for procedural fairness with the requirement to await the Supreme Court's ruling.

Conclusions: The Court left the issue of validity open and preserved all rights and remedies of the parties, ensuring that the adjudication process would continue without prejudice to the Supreme Court's eventual decision.

3. SIGNIFICANT HOLDINGS

"Since the reply filed by the Petitioner has not been considered while passing the impugned order, 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 a fresh reply to SCN along with supporting documents. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner."

"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 adherence to natural justice by ensuring that replies filed by taxpayers are duly considered before passing orders, and the necessity to await the Supreme Court's ruling on the validity of procedural notifications before conclusively adjudicating related disputes.

Final determinations on each issue are:

• The validity of the impugned notifications remains undecided and is subject to the Supreme Court's final ruling.
• The impugned order dated 27th April, 2024 is set aside for non-consideration of the Petitioner's reply and failure to provide an effective opportunity of personal hearing.
• The Petitioner is granted a fresh opportunity to file reply and be heard, with the adjudicating authority directed to pass a fresh order thereafter.
• All rights and remedies of the parties are preserved, and access to the GST portal for uploading replies and accessing notices is to be provided.

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