2025 (11) TMI 1788 - HC - GST

GST recovery orders quashed for lack of proper hearing; show-cause notices remanded with costs imposed on petitioner

M/s. Globus Agrofoods Pvt. Ltd. Versus Union of India & Ors.

HC quashed the impugned recovery orders arising from outstanding GST dues on the ground that the petitioner was denied a proper opportunity of hearing, as ... Recovery of outstanding dues - vires of N/N. 9/2023–Central Tax and N/N. 56/2023-Central Tax - Petitioner did not get proper opportunity of hearing - principles of natural justice - HELD THAT:- This Court in Neelgiri Machinery through its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others [2025 (3) TMI 1308 - DELHI HIGH COURT], under similar circumstances where the SCN was uploaded on the ‘Additional Notices Tab’ had remanded the matter. Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCNs have been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority. The impugned orders in the present petitions are set aside, subject to the Petitioner depositing a sum of Rs. 10,000/- in each of the two petitions as costs with Delhi High Court Legal Services Committee - Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, in view of the pendency of challenges to Notification Nos. 9/2023 and 56/2023 (Central and corresponding State Tax notifications) before the Supreme Court and other High Courts, the Court should adjudicate the validity of these notifications in the present petitions or keep the challenge open and subject to the Supreme Court's decision. 1.2 Whether ex parte adjudication orders passed under Section 73 of the Central Goods and Services Tax Act, 2017, pursuant to show cause notices to which the petitioner did not file replies or appear for personal hearing, can be sustained, having regard to alleged defects in service through the GST Portal (including placement of notices under the 'Additional Notices & Orders' tab) and the requirement of affording adequate opportunity of hearing. 1.3 Whether, in the facts of the case, the appropriate relief is to set aside the impugned orders and remand the matter to the Adjudicating Authority with conditions, rather than deciding the tax demands on merits. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Challenge to validity of Notification Nos. 9/2023 and 56/2023 (Central and State Tax): scope of adjudication Legal framework (as discussed) 2.1 The Court noted that the impugned notifications extending limitation periods were issued under Section 168A of the Central Goods and Services Tax Act, 2017, and that their validity has been the subject of extensive challenge before various High Courts, resulting in divergent views. 2.2 The Court specifically referred to: (i) prior orders passed in a batch of petitions led by W.P.(C) No. 16499/2023, where the challenge to Notification Nos. 9/2023 and 56/2023 (Central Tax) and their State counterparts was articulated; (ii) decisions of different High Courts upholding or quashing these notifications; and (iii) the pendency of S.L.P. No. 4240/2025 before the Supreme Court, where the legality of Notification Nos. 9/2023 and 56/2023 (Central Tax) and the power under Section 168A to extend time limits for adjudication under Section 73 are specifically under consideration. Interpretation and reasoning 2.3 The Court observed that the Supreme Court has already seized of the core issue regarding whether time limits for adjudication under Section 73 of the CGST/SGST Acts for the relevant financial years could validly be extended by invoking Section 168A through Notification Nos. 9/2023 and 56/2023. 2.4 In line with the approach adopted by the Punjab and Haryana High Court, which refrained from pronouncing on the vires of Section 168A and the impugned notifications and made its pending cases subject to the Supreme Court's final decision, the Court considered it appropriate not to render findings on the validity of these notifications in the present proceedings. 2.5 The Court also recorded that certain petitions involving parallel State notifications have been retained before it in a separate batch, led by W.P.(C) 9214/2024, for independent consideration, but that such broader issues need not be decided for the present petitions, which can be resolved on the narrower ground of lack of opportunity of hearing. Conclusions 2.6 The Court did not adjudicate on the validity of Notification Nos. 9/2023 and 56/2023 (Central and State) and expressly left the issue open. 2.7 It was held that the challenge to these notifications in the present petitions shall abide by and be subject to the outcome of: (i) the decision of the Supreme Court in S.L.P. No. 4240/2025; and (ii) the decision of the Court in W.P.(C) 9214/2024 concerning the parallel State notifications. Issue 2 - Validity of ex parte orders under Section 73 CGST Act in absence of effective notice and hearing Legal framework (as discussed) 2.8 The impugned demands were raised by show cause notices issued under Section 73 of the CGST Act for the relevant financial years, culminating in adjudication orders imposing tax, interest and penalty. 2.9 The Court referred to its earlier decisions dealing with service of show cause notices and orders through the GST Portal, particularly where notices were uploaded in the 'Additional Notices & Orders' tab, including: (i) decisions in M/s ACE Cardiopathy Solutions Private Ltd. and Kamla Vohra; (ii) orders in Satish Chand Mittal (Trade Name National Rubber Products), Anant Wire Industries; (iii) W.P.(C) 13727/2024 (Neelgiri Machinery); and (iv) W.P.(C) 4779/2025 (Sugandha Enterprises), where ex parte orders were set aside and matters remanded to secure compliance with principles of natural justice. Interpretation and reasoning 2.10 On facts, the show cause notices in issue were: (i) notice dated 25 September 2023 for FY 2017-18; and (ii) notice dated 28 May 2024 for FY 2019-20. The petitioner did not file any reply and did not appear for personal hearing, resulting in ex parte orders dated 7 December 2023 and 29 August 2024 respectively. 2.11 The petitioner contended that, for the 2017-18 notice, the communication was uploaded only in the 'Additional Notices & Orders' tab on the GST Portal, which led to non-awareness of the notice and consequent failure to file a reply or attend hearing. The petitioner further asserted that both the show cause notices and the resultant orders came to its knowledge only upon a statutory audit conducted in September 2025. 2.12 The Court accepted that, in respect of the 2017-18 notice, the contention regarding placement in the 'Additional Notices & Orders' tab was relevant and consistent with earlier cases where taxpayers were held to have possibly not accessed such notices, prompting remand to the Adjudicating Authority. 2.13 As regards the 2019-20 notice dated 28 May 2024, the Court noted that, due to changes on the GST Portal implemented on 16 January 2024, the specific grievance about the 'Additional Notices & Orders' tab would not strictly apply in the same manner. Nonetheless, the Court took into account that in both matters: (i) no replies were filed; (ii) no personal hearings were effectively availed; and (iii) substantial demands were raised ex parte, without the petitioner's case being heard on merits. 2.14 Relying on its own precedents (Neelgiri Machinery and Sugandha Enterprises, among others), where similar ex parte orders passed without effective opportunity of hearing were set aside and matters remanded, the Court held that the interests of justice warranted a similar course in the present petitions, particularly as no adjudication on the merits of the tax disputes had taken place with the petitioner's participation. 2.15 The Court emphasised that the objective is to secure compliance with principles of natural justice by ensuring that: (i) the taxpayer is clearly informed of the show cause proceedings; (ii) a reasonable opportunity is afforded to file a reply; and (iii) a personal hearing is granted before any adverse order is passed. Conclusions 2.16 The Court concluded that the impugned ex parte adjudication orders passed under Section 73 of the CGST Act could not be sustained in the absence of a proper and effective opportunity to the petitioner to respond and to be heard. 2.17 Both impugned orders were set aside and the matters were remanded to the concerned Adjudicating Authority, subject to the petitioner depositing costs of Rs. 10,000/- in each petition with the Delhi High Court Legal Services Committee. Issue 3 - Appropriate relief and directions upon remand Interpretation and reasoning 2.18 Having decided to set aside the impugned orders without examining the validity of the impugned notifications or the merits of the demands, the Court considered the conditions and directions necessary to balance the interests of the revenue and the taxpayer while ensuring a fair adjudicatory process. 2.19 The Court followed the remedial structure adopted in earlier similar matters, whereby: (i) the taxpayer is granted a fixed period to file detailed replies to the show cause notices; (ii) the Adjudicating Authority is obliged to issue a specific notice of personal hearing; and (iii) such hearing notice must be communicated not only through the portal but also by direct electronic modes (e-mail and mobile), to obviate any dispute about service. Conclusions 2.20 The impugned orders for FY 2017-18 and 2019-20 were set aside on the condition that the petitioner deposits Rs. 10,000/- as costs in each petition with the Delhi High Court Legal Services Committee. 2.21 The petitioner was granted time up to 10 January 2025 to file replies to the respective show cause notices. Upon receipt of the replies, the Adjudicating Authority is required to: (i) issue a notice of personal hearing; and (ii) communicate such notice to the petitioner both by e-mail and on the specified mobile number, in addition to any portal-based communication. 2.22 The Adjudicating Authority is directed to consider the replies and the submissions made at the personal hearing and to pass fresh, reasoned orders in accordance with law. 2.23 It was expressly clarified that any fresh orders passed on remand shall be subject to the final outcome of: (i) S.L.P. No. 4240/2025 before the Supreme Court; and (ii) W.P.(C) 9214/2024 before the Court, concerning the validity of the impugned notifications.