Petitioner must approach appellate authority under Section 107 CGST Act after GST show cause notice challenge dismissed

The Delhi HC dismissed a petition challenging a GST show cause notice (SCN) and adjudication order. The petitioner's rectification application was rejected on 11th November 2024. The court found no fault with the department's compliance, noting proper issuance of SCN, reminders, and order uploads on the GST portal. The court held the petitioner should have been more diligent in filing proper replies. The petition was dismissed with direction to approach the appellate authority under Section 107 of CGST Act by 10th July 2025. The validity of the impugned notification remains open, subject to pending SC and HC decisions.

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The core legal questions considered by the Court in this matter include:

1. Whether the show cause notice dated 27th May 2024 and the consequent adjudication order dated 22nd August 2024 issued by the Department of Trade & Taxes, GNCTD, are valid and whether the Petitioner was afforded a fair opportunity to respond.

2. The vires and validity of Notification No. 56/2023-Central Tax dated 28th December 2023 and Notification No. 56/2023-State Tax dated 11th July 2024, particularly concerning the procedural requirements under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act).

3. The procedural propriety and legality of extending the time limit for adjudication of show cause notices and passing orders under Section 73 of the GST Act and the corresponding State GST Act for the financial year 2019-20 by issuance of the impugned notifications.

4. Whether the Petitioner was denied natural justice due to the alleged non-visibility of the show cause notice on the GST portal and the consequent passing of ex-parte orders without personal hearings.

5. The appropriate remedy and relief available to the Petitioner in light of the above issues and pending adjudication before higher forums, including the Supreme Court.

Issue-wise Detailed Analysis:

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

The impugned notifications aimed to extend the limitation period for adjudication of show cause notices and passing of orders under Section 73 of the GST Act for the financial year 2019-20. The Petitioner challenged these notifications on grounds that the proper procedure, specifically the prior recommendation of the GST Council as mandated by Section 168A, was not followed.

The Court noted that this issue is currently sub judice before the Supreme Court in S.L.P. No. 4240/2025. Various High Courts have taken divergent views: 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 (Central Tax). The Telangana High Court expressed observations regarding invalidity but did not decide the issue finally.

The Supreme Court has issued notice and interim orders on this matter, reflecting the cleavage of opinion. The Punjab and Haryana High Court, respecting judicial discipline, refrained from expressing views on the vires of Section 168A and related notifications, deferring to the Supreme Court's ultimate decision.

In light of this, the Court in the present case acknowledged that the validity of the impugned notifications is pending before the Supreme Court and accordingly refrained from adjudicating on their vires. It observed that the outcome of the Supreme Court's decision would be binding on all related cases.

Procedural Fairness and Opportunity to the Petitioner

The Petitioner contended that the show cause notice dated 27th May 2024 was uploaded on the 'Additional Notices Tab' of the GST portal and was not brought to their attention, resulting in non-filing of replies and ex-parte adjudication orders. The Petitioner also filed a rectification application on 19th September 2024, which was rejected without hearing.

The Respondent Department countered that the portal had been rectified on 16th January 2024 to ensure visibility of notices, and reminders were issued on 23rd and 30th July 2024. The Court examined the rectification application and found it to be a one-sentence statement denying the alleged mismatches without elaboration or justification. The Court noted that the Petitioner did not provide any substantial reasoning or evidence in the rectification application to warrant reconsideration.

The Court observed that all procedural steps required of the Department were duly followed: issuance of the show cause notice and reminders on the portal, consideration of the rectification application, and uploading of the impugned order. The Court concluded there was no fault on the part of the Department.

Given the above, the Court held that the Petitioner ought to have been more diligent in responding and filing a comprehensive reply or application for rectification. The absence of a valid justification in the rectification application weighed against the Petitioner's claim of denial of opportunity.

Remedial Relief and Further Proceedings

The Court recognized that the validity of the impugned notifications remains an open question pending the Supreme Court's decision. However, the Court was of the view that the Petitioner could pursue appellate remedies without awaiting the final outcome on the notifications' validity.

Accordingly, the Court granted the Petitioner time until 10th July 2025 to file an appeal before the appellate authority under Section 107 of the Central Goods and Services Tax Act, 2017. The Court directed that if the appeal is filed within the stipulated time along with the mandatory pre-deposit, it shall be adjudicated on merits and shall not be dismissed on the ground of limitation.

The Court clarified that its observations in the present petition would have no bearing on the appellate authority's decision and that any order passed by the appellate authority would be subject to the outcome of the Supreme Court's decision in S.L.P No. 4240/2025 and the decision of this Court in the related batch of petitions concerning the State notifications.

Further, the Court ordered that access to the GST portal be granted to the Petitioner to enable them to access orders, notices, and related documents.

Significant Holdings

The Court preserved the principle that "the validity of the impugned notifications is left open" and that adjudication on such issues is deferred pending the Supreme Court's final ruling.

It affirmed the procedural principle that a party must be afforded a fair opportunity to respond to show cause notices and that mere technical non-visibility on the portal, if remedied by the Department and followed by reminders, does not absolve the Petitioner from the duty to respond diligently.

The Court held:

"Considering the fact that the Respondent-Department has taken all steps in the matter that were required to be taken... this Court is of the opinion that there is no fault on part of the Respondent-Department. The petitioner ought to have been more careful and diligent in filing a proper reply or application for rectification under these circumstances."

It further established the procedural safeguard that appeals filed within the prescribed time and with mandatory pre-deposit must be adjudicated on merits and not dismissed on limitation grounds, ensuring substantive justice.

The Court emphasized judicial discipline by refraining from expressing opinions on issues pending before the Supreme Court and directing adherence to the Supreme Court's eventual ruling.

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