2025 (11) TMI 239 - HC - GST

Adjudication remanded for fresh decision after petitioner given until 30 November 2025 to file replies and get personal hearing

HC remanded the adjudication to the Adjudicating Authority because the petitioner was not afforded an opportunity to be heard and had not filed replies to ... Extension of time limits for adjudication - validity of the N/N. 56/2023-Central Tax - HELD THAT:- This Court in Sugandha Enterprises through its Proprietor Devender Kumar Singh V. Commissioner Delhi Goods And Service Tax and Others [2025 (5) TMI 234 - DELHI HIGH COURT], under similar circumstances where no reply was filed to the SCN had remanded the matter holding that 'This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCN and the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner to contest the matter on merits.' Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCNs has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority. The Petitioner is granted time till 30th November, 2025, to file the reply to SCNs. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing - petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 extending time-limits for adjudication under Section 73/SGST provisions are valid where (a) the recommendation of the GST Council preceded issuance, (b) ratification was given subsequent to issuance, or (c) state-level notifications were issued after the expiry of an earlier state notification's limitation period. 2. Whether adjudication orders passed pursuant to show cause notices (SCNs) which were not received by the taxpayer and where no reply or personal hearing took place are vitiated by breach of the principles of natural justice and require remand. 3. Whether interim judicial restraint is appropriate pending resolution of conflicting High Court decisions on the validity of the impugned notifications and an extant Special Leave Petition before the Supreme Court, and how relief should be tailored in such circumstances. ISSUE-WISE DETAILED ANALYSIS - Validity of Notifications under Section 168A (Extension of Time-limits) Legal framework: Section 168A (as invoked) confers power to extend statutory time-limits for adjudication under the CGST Act; such extensions require prior recommendation of the GST Council as per the statutory scheme. Precedent Treatment: Multiple High Courts have taken divergent views - some upholding Notification No.9 and/or No.56 (Central Tax), while at least one High Court has quashed Notification No.56 (Central Tax). A High Court's observations on Notification No.56 are the subject-matter of a pending Special Leave Petition before the Supreme Court. Other High Courts have issued interim or disposition orders deferring to the Supreme Court's eventual decision. Interpretation and reasoning: The Court notes the central legal controversy - whether extensions under Section 168A complied with the procedural requirement of prior GST Council recommendation and whether any post-hoc ratification can cure non-compliance. The Court records that in respect of Notification No.9 the recommendation preceded issuance, whereas Notification No.56 (Central Tax) is contested on the ground that ratification followed issuance and the notification's recital incorrectly stated that it was on recommendation of the GST Council. For state-level Notifications, the challenge includes issuance after expiration of an earlier state notification's limitation period. Ratio vs. Obiter: The Court does not finally decide the vires of the notifications. Observations regarding divergence of High Court opinions, the requirement of prior GST Council recommendation, and the pending Supreme Court lis are treated as interlocutory/obiter with respect to the substantive vires question. No definitive ratio on validity of notifications is laid down by this Court in the present judgment; that issue is expressly left open for final adjudication by the Supreme Court. Conclusion: The Court refrains from adjudicating the validity of the impugned notifications on merits, noting the cleavage of opinions and an active Supreme Court proceeding. The question of validity remains undecided and is reserved for determination by the Supreme Court; related interim measures and case-specific reliefs are fashioned without prejudicing that ultimate determination. ISSUE-WISE DETAILED ANALYSIS - Service of SCNs, Opportunity to Reply and Principles of Natural Justice Legal framework: Principles of natural justice require that a taxpayer be afforded adequate notice of the allegations, an opportunity to file objections/reply to an SCN (typically in DRC-06 or by personal hearing), and that adjudicatory orders be speaking and based on consideration of submissions where filed. Precedent Treatment: The Court relies upon and follows its own previous interlocutory decision in a similar matter where an adjudication order passed without affording opportunity to reply/personal hearing was set aside and remanded to permit filing of reply and grant of personal hearing subject to conditions. Interpretation and reasoning: On facts, the SCNs were not received at the changed contact address of the taxpayer after cancellation of registration; they were only uploaded on the old GST portal which the taxpayer did not access. No reply was filed and adjudication proceeded ex parte. The Court finds a prima facie absence of adequate opportunity to be heard where reminders were insufficient or communication failed to reach the addressee, and where the adjudicating authority's order records absence of reply/hearing without demonstrable effective service and consideration of representations. Ratio vs. Obiter: The finding that adjudication without effective service and without providing a personal hearing/reply vitiates the impugned order (necessitating remand) is applied as the operative ratio in the present petitions. Observations about systemic issues and concessions by counsel constitute ancillary reasoning (obiter) linked to remedial direction. Conclusion: The Court sets aside the impugned adjudication orders which were passed without affording effective opportunity to reply or personal hearing. The taxpayers are granted a specified time (up to 30th November, 2025 in the recorded order) to file replies to SCNs; upon filing, the adjudicating authority must issue notice for personal hearing and consider submissions afresh before passing a fresh order. The fresh adjudication is to be subject to the eventual outcome on validity of the impugned notifications. ISSUE-WISE DETAILED ANALYSIS - Interim Relief and Conditioning of Relief Pending Higher Court Decision Legal framework: Courts may grant interim or case-specific relief to preserve parties' rights where a larger constitutional/statutory question is pending before a higher court, while ensuring judicial discipline and uniformity by not pronouncing finally on the antecedent legal issue. Precedent Treatment: Other High Courts have either refrained from expressing views on Section 168A and related notifications pending the Supreme Court's adjudication or have disposed of writ petitions by reference to the Supreme Court's pending determination. Interim orders in connected High Court matters have guided the approach of restraint. Interpretation and reasoning: Given conflicting High Court decisions and the pendency of the SLP in the Supreme Court, the Court deems it appropriate to (a) avoid pronouncing on the vires of the impugned notifications, and (b) tailor reliefs to vindicate procedural fairness - remanding cases where parties were denied opportunity, permitting appellate remedies, or retaining state-notification challenges for consideration where appropriate. The Court conditions the grant of opportunity on payment of a specified sum to the department in matters where the validity of notifications is also challenged, to balance competing equities. Ratio vs. Obiter: The approach of refraining from substantive adjudication on the validity question and granting procedural reliefs is the operative principle (ratio) in the present disposition. Remarks on other High Courts' views and the desirability of uniformity pending Supreme Court adjudication are treated as contextual obiter that supports the interim regime ordered. Conclusion: Interim relief is granted in appropriate categories - remand for fresh consideration with opportunity to reply/hearing, permission to pursue appellate remedies, and retention of certain state-notification challenges - all expressly subject to the final decision of the Supreme Court in the pending SLP. In some cases, relief is conditioned upon payment of Rs. 20,000/- to the department per petition (as recorded in analogous orders). ADDITIONAL CONCLUSIONS AND ADMINISTRATIVE DIRECTIONS 1. Orders remanding adjudication to permit reply and personal hearing must ensure communication of personal hearing notices to correct mobile number and e-mail address provided by the taxpayer; the adjudicating authority must duly consider the reply and hearing submissions before passing a fresh order. 2. All orders passed pursuant to the remand or appellate process are expressly made subject to the outcome of the pending Supreme Court determination on the validity of Notification No.56/2023 (Central Tax) and related notifications, thereby preserving appellate and supervisory jurisdiction and avoiding preemption of the higher court's decision. 3. The Court exercises judicial restraint in respect of the constitutional/statutory challenge to Section 168A and related notifications and confines its present reliefs to procedural fairness and inter se interim measures pending final adjudication by the Supreme Court.