SCN uploaded on portal without proper notice violates natural justice principles, demand orders set aside

Delhi HC set aside demand orders where SCN was uploaded on 'Additional Notices Tab' without proper notice to petitioner. Court found petitioner did not receive adequate opportunity to be heard as SCN dated 29th September 2023 was not brought to petitioner's notice. Following precedent in Neelgiri Machinery case, HC remanded matter to adjudicating authority directing petitioner to file reply within thirty days and requiring department to email hearing notices rather than merely uploading on portal.

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Issues Presented and Considered

The core legal questions considered by the Court include:

• The validity and vires of Notification No. 9/2023-Central Tax dated 31st March 2023 and related notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act), particularly concerning the extension of time limits for adjudication of show cause notices and passing of orders under Section 73 of the GST Act.
• The procedural propriety and legality of the show cause notice dated 29th September 2023 issued by the Department of Trade & Taxes, Government of NCT of Delhi, including whether the petitioner was properly served and given a fair opportunity to respond.
• The impact of the placement of notices on the GST portal, specifically the uploading of notices under the 'Additional Notices Tab' and whether this method provided adequate notice to the petitioner.
• The effect of pending Supreme Court proceedings (SLP No. 4240/2025) on the adjudication of challenges to the impugned notifications and related orders.
• The entitlement of the petitioner to personal hearings and the opportunity to file replies in light of the alleged procedural lapses.

Issue-wise Detailed Analysis

1. Validity of Notifications under Section 168A of the GST Act

Legal Framework and Precedents: Section 168A of the GST Act empowers the government to extend the time limits for adjudication of show cause notices and passing of orders. The issuance of notifications under this section requires prior recommendation of the GST Council. The validity of such notifications has been challenged in multiple High Courts, resulting in divergent judicial opinions:

• The Allahabad High Court upheld Notification No. 9/2023 (Central Tax).
• The Patna High Court upheld Notification No. 56/2023 (Central Tax).
• The Guwahati High Court quashed Notification No. 56/2023 (Central Tax).
• The Telangana High Court raised observations on the invalidity of Notification No. 56/2023 (Central Tax), with the matter currently under Supreme Court consideration.

Court's Interpretation and Reasoning: The Court noted the conflicting views among various High Courts and acknowledged that the ultimate determination on the validity of the notifications rests with the Supreme Court, which has issued notices and is hearing the Special Leave Petition (SLP No. 4240/2025). The Court prudently refrained from expressing any opinion on the vires of the notifications, adhering to judicial discipline and respecting the ongoing apex court proceedings.

Application of Law to Facts: Given the pendency of the Supreme Court's decision, the Court held that the question of the validity of the impugned notifications remains open and subject to the outcome of the apex court's ruling.

2. Procedural Fairness and Service of Show Cause Notice

Legal Framework and Precedents: Principles of natural justice require that the party against whom adverse action is contemplated must be given adequate notice and a fair opportunity to present their case. Prior decisions of this Court, including in W.P.(C) 13727/2024 and other cited cases (e.g., M/s ACE Cardiopathy Solutions Private Ltd. v. Union of India & Ors.), have emphasized that orders should not be passed ex-parte without proper service and opportunity to be heard.

Court's Interpretation and Reasoning: The Court observed that the show cause notice dated 29th September 2023 was uploaded on the GST portal under the 'Additional Notices Tab', which was not prominently visible or brought to the petitioner's attention. Consequently, the petitioner was unaware of the notice and did not file any reply. The Court noted that the Department's practice of uploading notices in this manner effectively denied the petitioner a fair opportunity to respond or appear for personal hearings, leading to ex-parte orders and imposition of demands and penalties.

Key Evidence and Findings: The petitioner's submissions and the record showed that the reminder notice dated 2nd November 2023 was similarly uploaded under the 'Additional Notices Tab' and not communicated effectively. The Court also referred to changes made to the GST portal after 16th January 2024 to improve visibility of such notices, but these changes were not applicable at the time the SCN was issued.

Application of Law to Facts: The Court applied principles of natural justice and prior judicial pronouncements to conclude that the petitioner was denied a proper opportunity to be heard. The impugned orders based on the SCN were therefore set aside, and the matter was remanded to the adjudicating authority to provide the petitioner a fair chance to file replies and be heard.

Treatment of Competing Arguments: While the Department argued that the notices were uploaded on the portal, the Court found that mere uploading under a less visible tab did not constitute valid service. The Department's acknowledgment of the issue and subsequent portal improvements supported the petitioner's contention.

3. Impact of Pending Supreme Court Proceedings on Adjudication

Legal Framework and Precedents: The Court recognized that the Supreme Court is currently seized of the question regarding the validity of the notifications under Section 168A of the GST Act. It is a settled principle that lower courts should not pre-empt or contradict the apex court's pending adjudication on substantial questions of law.

Court's Interpretation and Reasoning: The Court explicitly stated that the validity of the impugned notifications is left open and any order passed by the adjudicating authority shall be subject to the Supreme Court's final decision. The Court also noted interim orders passed by other High Courts and the Supreme Court's directions, emphasizing judicial discipline and restraint.

Application of Law to Facts: The Court disposed of the writ petition with the condition that all rights and remedies remain open, and that the adjudicating authority's fresh order would be subject to the Supreme Court's ruling in SLP No. 4240/2025.

4. Directions for Fair Opportunity and Procedural Compliance

Court's Reasoning and Orders: To ensure compliance with principles of natural justice, the Court directed the following:

• The impugned orders dated 23rd April 2024 and 5th December 2023 were set aside.
• The petitioner was granted time until 10th July 2025 to file a reply to the SCN.
• The adjudicating authority was directed to issue personal hearing notices to the petitioner, which must be communicated not only via the GST portal but also by email and mobile phone, ensuring actual receipt.
• The petitioner's submissions during personal hearings and replies shall be duly considered before passing any fresh order.
• Access to the GST portal shall be provided to the petitioner to enable uploading of replies and access to notices and related documents.

The Court emphasized that these procedural safeguards are necessary irrespective of the ultimate validity of the notifications, to ensure that adjudication is conducted fairly and in accordance with law.

Significant Holdings

"The Court is of the prima facie view that, depending upon the categories of petitions, orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases, proceedings including appellate remedies may be permitted to be pursued by the Petitioners, without delving into the question of the validity of the said notifications at this stage."

"The impugned order is set aside. The Petitioner is granted time till 10th July 2025, to file the reply to the SCN. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address."

"However, it is made clear that the issue in respect of 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."

"All rights and remedies of the parties are left open. Access to the GST Portal, shall be provided to the Petitioner to enable uploading of the reply as also access to the notices and related documents."

Core principles established include:

• Procedural fairness and natural justice require effective service of notices and opportunity to be heard, including personal hearings, before passing orders under GST laws.
• Uploading notices on a portal under a non-prominent tab does not constitute valid service if it deprives the party of knowledge and opportunity to respond.
• Judicial restraint is warranted where the Supreme Court is seized of the question of validity of notifications; lower courts should avoid pre-emptive rulings on such issues.
• Interim relief may be granted to ensure parties are not prejudiced by procedural lapses pending final adjudication.

Final determinations on each issue were that the impugned show cause notice and consequential orders were set aside due to lack of proper service and opportunity to be heard; the petitioner was granted time and opportunity to respond; and the validity of the impugned notifications remains subject to the Supreme Court's decision.

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