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1. ISSUES PRESENTED AND CONSIDERED
1.1 Whether the Order-in-Original passed ex parte, without a reply to the notice or show cause notice and without effective participation in personal hearing, warranted interference on the ground of violation of principles of natural justice in light of the proprietor's medical condition.
1.2 Whether the matter ought to be remanded to the adjudicating authority for fresh consideration on merits, and if so, on what terms and conditions, given that statutory notices and personal hearing opportunities had already been issued.
1.3 How the pendency before the Supreme Court of challenges to Notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017, relating to the time-limit for adjudication for Financial Year 2019-2020, affected the relief to be granted.
2. ISSUE-WISE DETAILED ANALYSIS
2.1 Ex parte Order-in-Original and principles of natural justice
Legal framework (as discussed):
2.1.1 The Court proceeded on the basis of the general "Principle of Natural Justice" requiring that a person be afforded an opportunity to file a reply to a show cause notice and to be heard before adverse orders are passed. The judgment relied on an earlier decision where an ex parte GST adjudication order, passed without effective opportunity to reply or be heard, was set aside and the matter remanded.
Interpretation and reasoning:
2.1.2 The record showed that: (a) a notice in Form GST ASMT-10 and thereafter a show cause notice under Section 73(1) of the Central Goods and Services Tax Act, 2017 were issued; (b) three personal hearing notices were issued; (c) no reply was filed and no appearance was made by the taxable person; and (d) the Order-in-Original was passed ex parte confirming demand and penalties.
2.1.3 The Court noted the plea that the proprietor of the taxable entity was a senior citizen suffering from an "acute kidney" condition since 2022, and that this medical condition prevented filing of replies and attending hearings.
2.1.4 Referring to its earlier decision in a similar factual situation-where no reply to the show cause notice had been filed and the adjudicating authority passed an ex parte order-the Court reiterated that where an assessee is effectively not heard and the order is non-speaking or passed without considering the assessee's stand, an opportunity ought to be afforded to contest the matter on merits.
2.1.5 Applying this approach, the Court found that, despite service of notices and scheduling of hearings, the medical condition of the proprietor justified giving one more opportunity to present a defence, instead of allowing the ex parte Order-in-Original to stand.
Conclusions:
2.1.6 The ex parte Order-in-Original, having been passed without an effective opportunity for the taxable person to file a reply or be heard on merits, warranted interference in order to satisfy the principles of natural justice in the particular facts of the case.
2.2 Remand and conditional setting aside of the Order-in-Original
Interpretation and reasoning:
2.2.1 While accepting that the medical condition of the proprietor justified a fresh opportunity, the Court also recognised that the taxable person had been duly served and had been given repeated opportunities for personal hearing which were not availed.
2.2.2 Balancing the need to uphold natural justice with the fact of earlier non-compliance by the assessee, the Court held that any interference with the Order-in-Original should be conditional rather than absolute.
2.2.3 Guided by its earlier practice in comparable matters, the Court decided to: (a) set aside the Order-in-Original; (b) remit the matter to the adjudicating authority; and (c) impose costs as a condition for such relief, so as to discourage casual non-response to statutory notices while still preserving the assessee's right to a fair hearing.
2.2.4 The Court accordingly directed that: (i) the Order-in-Original would be set aside subject to the taxable person paying specified costs to the Delhi High Court Bar Association within a fixed time; (ii) the assessee would be permitted to file a reply to the show cause notice within a stipulated deadline, enclosing proof of costs payment; (iii) upon receipt of reply, the adjudicating authority must issue a notice of personal hearing on specified e-mail addresses and mobile number; (iv) the assessee must attend the hearing; and (v) the adjudicating authority must pass a reasoned order in accordance with law after such hearing.
2.2.5 The Court also directed that access to the GST Portal be restored within a week to enable uploading of reply and access to all relevant notices and documents, thereby ensuring the assessee could effectively prosecute the matter on remand.
Conclusions:
2.2.6 The Order-in-Original was set aside and the matter remanded to the adjudicating authority for fresh adjudication on merits, conditional upon payment of costs and subject to strict timelines for filing reply and conducting personal hearing.
2.2.7 The adjudicating authority was mandated to pass a fresh, reasoned order after granting a proper opportunity to the taxable person.
2.3 Effect of pending challenges to Notifications issued under Section 168A CGST Act
Legal framework (as discussed):
2.3.1 The Court recorded that for Financial Year 2019-2020, challenges to Notifications extending limitation under Section 168A of the Central Goods and Services Tax Act, 2017, including Notification No. 9/2023-Central Tax and Notification No. 56/2023-Central Tax, were pending before various courts and had reached the Supreme Court.
2.3.2 The Court referred to: (a) divergent decisions of several High Courts on the validity of these Notifications; (b) pending proceedings before the Supreme Court in a Special Leave Petition where the core issue is whether the time limit for adjudication of show cause notices and passing orders under Section 73 for FY 2019-2020 could be extended through such Notifications; and (c) an order of another High Court deferring examination of vires and making its cases subject to the Supreme Court's ultimate decision.
Interpretation and reasoning:
2.3.3 The Court noted that though the petitioner had adverted to the challenge to the Notifications and to their pendency before the Supreme Court, the present petition did not specifically seek quashing of the said Notifications.
2.3.4 Recognising that the central questions on the validity and scope of Notifications issued under Section 168A for FY 2019-2020 were already sub judice before the Supreme Court, and that various High Courts had either taken differing views or made their own proceedings subject to the Supreme Court's decision, the Court considered it appropriate not to pronounce on the vires or validity of the Notifications in this matter.
2.3.5 The Court instead confined itself to granting procedural relief-setting aside the ex parte Order-in-Original and remanding the matter-while making it clear that such relief would be without prejudice to the rights of the parties to raise all legal contentions, including any arising from the outcome of the Supreme Court proceedings.
Conclusions:
2.3.6 The Court declined to enter into the merits of the challenge to the Notifications issued under Section 168A, noting that the issue is pending before the Supreme Court and that relief in the present matter was being granted independently of those questions.
2.3.7 All rights and remedies of the parties, including those related to the validity or effect of the concerned Notifications and to any future orders of the Supreme Court, were expressly kept open, and the present order was made subject to such further developments in law.
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