GST demand and notices under Notifications 9/2023 and 56/2023 quashed; fresh hearing directed after missed SCN

HC dealt with a petition challenging GST demand and the vires of Notifications 9/2023-Central Tax and 56/2023-Central Tax, similar to issues pending before SC in a batch led by DJST Traders Pvt. Ltd. HC noted the petitioner's contention that the SCN dated 30 May 2024 never came to its knowledge due to an internal lapse by its accountant, resulting in no reply. Holding that, in these circumstances, neither the SCN nor the consequential demand could be sustained, HC set aside the impugned order. HC directed the petitioner to appear before the Delhi GST Department on 15 December 2025 for personal hearing and to file short written submissions or reply.

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ISSUES PRESENTED AND CONSIDERED

1. Whether notifications purporting to extend time-limits for adjudication under Section 168A of the Central Goods and Services Tax Act, 2017 were validly issued in light of the requirement of prior recommendation by the GST Council.

2. Whether an adjudication order passed under Section 73 of the GST Act can be sustained where the Show Cause Notice (SCN) and the final order lack adequate reasons and the taxpayer was effectively adjudicated ex parte without meaningful opportunity to be heard.

3. What interim or remedial relief is appropriate where validity of notifications is sub-judice before the Supreme Court and different High Courts have taken divergent views.

ISSUE-WISE DETAILED ANALYSIS - Issue 1: Validity of Notifications under Section 168A

Legal framework: Section 168A (as invoked) authorises extension of time-limits for adjudication under the GST Act, subject to the statutory requirement of prior recommendation by the GST Council before issuance of notification effecting such an extension.

Precedent treatment: Multiple High Courts have rendered conflicting decisions-some upholding Notification No.9/2023 and/or No.56/2023, while at least one High Court has quashed Notification No.56/2023. A matter raising these precise questions is pending before the Supreme Court in a Special Leave Petition, where notice has been issued.

Interpretation and reasoning: The Court recognises the central legal question (whether time-limits for adjudication under Section 73/SGST could be extended by notifications issued under Section 168A) but, given the cleavage of opinion among High Courts and active proceedings before the Supreme Court, refrains from adjudicating the vires of the notifications on merits in this petition. The Court notes specific allegations against some notifications that recommendation by the GST Council was either given after issuance or the notifications were issued after expiry of prior limiting notifications, but does not decide those legal contentions.

Ratio vs. Obiter: The restraint from deciding the vires is a procedural ratio in context - the Court expressly defers to the Supreme Court's pending adjudication; observations about conflicting High Court decisions and the pendency of the SLP are operative points of law in the judgment (binding in the case context) rather than tertiary obiter.

Conclusion: The validity of the impugned notifications under Section 168A is left open and undecided. Any orders in the present proceedings are made subject to the final decision of the Supreme Court in the connected SLP and related determinations by this Court in lead matters.

ISSUE-WISE DETAILED ANALYSIS - Issue 2: Sufficiency of Reasons in SCN and Final Order; Right to be Heard

Legal framework: Principles of natural justice and statutory requirements under the GST regime oblige that an SCN and any consequent adjudication must inform the taxpayer of the case against them with sufficient reasons, and afford a meaningful opportunity to respond, including personal hearing and consideration of replies.

Precedent treatment: The Court references the general mandating of reasoned orders and opportunity to be heard in administrative tax adjudications. While specific precedents are not reproduced in the judgment, the Court treats the absence of reasons and ex parte adjudication as legally untenable on settled administrative law principles.

Interpretation and reasoning: The SCN (FORM-GST-DRC-01) lacked substantive reasons explaining the basis for the proposed assessment; it merely stated that scrutiny was being carried out and directed upload of documents. The impugned final order likewise did not record reasons and concluded the taxpayer "had nothing to say" because no reply was filed and no one attended personal hearing. The Court found that neither the SCN nor the final demand order provided adequate reasons or justification and that the adjudication was effectively ex parte without demonstrating sufficiency of notice or an opportunity to be meaningfully heard.

Ratio vs. Obiter: The holding that an SCN and final order devoid of reasons and passed ex parte cannot be sustained is a ratio of the judgment in relation to the petition under Articles 226/227; the requirement to provide a fresh personal hearing and allow submissions is an operative remedial direction based on this legal principle.

Conclusion: The impugned order is set aside on the ground of absence of adequate reasons and failure to afford a meaningful opportunity to be heard. The taxpayer shall be granted a personal hearing and permitted to file a reply/short written submissions; the adjudicating authority must consider such reply and pass a fresh reasoned order.

ISSUE-WISE DETAILED ANALYSIS - Issue 3: Appropriate Relief and Interim Measures Pending Higher Court Determination

Legal framework: Courts may fashion interim or remedial reliefs without prejudicing higher courts' adjudication, ensuring parties are not irreparably prejudiced while broader legal issues are sub-judice.

Precedent treatment: Several High Courts have either stayed or disposed petitions pending the Supreme Court's decision; one High Court declined to express views and directed adherence to the Supreme Court outcome. The Court applies principles of judicial discipline in not pre-empting the Supreme Court's decision on Section 168A's vires.

Interpretation and reasoning: Recognising divergent High Court views and the pending SLP, the Court apportions relief focused on procedural fairness rather than the substantive validity of the notifications. It categorises pending matters and, depending on factual matrix, either remands matters for fresh adjudication or directs availability of appellate remedies. For the present petition, the Court (i) sets aside the impugned order for lack of reasons, (ii) directs a personal hearing on a specified date and permits filing of reply and short written submissions, (iii) requires the adjudicating authority to pass a fresh reasoned order considering the reply, (iv) provides portal access for uploading replies and notices, and (v) expressly states that any fresh order will remain subject to the outcome of the Supreme Court proceedings and related lead matters before this Court.

Ratio vs. Obiter: The remedial directions (personal hearing, filing, fresh reasoned order, portal access) are ratio in this case and tailored to protect the right to be heard without deciding the vires of notifications. The refusal to rule on Section 168A is an operative restraint (ratio) grounded in respect for the pending higher court adjudication; observations on other courts' decisions are informative (obiter) but cited to justify restraint.

Conclusion: Interim/remedial relief confined to procedural fairness is appropriate. The adjudicating authority must provide access to the GST portal within one week for uploading replies and documents; hearing to be fixed and fresh reasoned order to be passed after considering submissions. All rights and remedies are preserved and any adjudication to be subject to higher court outcomes.

CROSS-REFERENCES AND FINAL NOTES

1. The Court's refusal to decide the validity of Section 168A notifications is explicitly linked to the existence of conflicting High Court decisions and an active Special Leave Petition before the Supreme Court; this deferral is central to the relief fashioned.

2. The directions for personal hearing, opportunity to file replies, portal access, and fresh reasoned adjudication are independent of the notifications' vires and grounded in the fundamental requirement of reasoned administrative action and the right to be heard.

3. All orders passed pursuant to these directions are expressly made subject to the outcome of the Supreme Court proceedings and related determinations by this Court; parties' appellate and other remedies are kept open.

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