SCN adjudication under GST notifications 56/2023, 9/2023 quashed for breach of natural justice; matter remanded

HC examined a challenge to N/N. 56/2023-Central Tax and N/N. 9/2023-Central Tax concerning extension of time for adjudication of SCN, in a case where the assessee had not filed a reply to the SCN and the order-in-original was passed thereafter. Noting that, despite technical changes to the GST portal, the assessee was effectively denied a meaningful opportunity of hearing, HC followed its earlier precedent in a similar fact situation. Holding that principles of natural justice were violated, HC set aside the impugned SCN adjudication order and remanded the matter to the Adjudicating Authority for fresh consideration on merits, while the broader constitutional challenge to the notifications remains pending. The writ petition was disposed of accordingly.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the issuance and service of the show cause notice and consequential order through the GST portal, including the "Additional Notices Tab", resulted in denial of opportunity of hearing and violation of principles of natural justice.

1.2 Whether, in view of the pendency before the Supreme Court of the challenge to the relevant GST notification(s) extending limitation, the Court should adjudicate the vires of such notifications or confine itself to granting procedural relief by remanding the matter.

1.3 Whether the ex parte adjudication order passed without any reply or effective participation by the taxpayer ought to be set aside and the matter remanded with conditions, including imposition of costs and directions for fresh adjudication.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Effect of service via GST portal and "Additional Notices Tab"; denial of natural justice

Interpretation and reasoning

2.1 The show cause notice was issued on 29 May 2024 and the consequential order was passed on 17 August 2024, both after 16 January 2024, when changes were made to the GST portal making the "Additional Notices Tab" visible.

2.2 The taxpayer contended that the show cause notice and order were uploaded only on the "Additional Notices Tab" and therefore were not effectively brought to its knowledge, and that it came to know of them only during a statutory audit in September 2025.

2.3 The Court held that, in the given factual matrix, the objection based on the "Additional Notices Tab" was not tenable because the relevant documents were issued and uploaded after the portal changes of 16 January 2024, when such tab had already been made visible.

2.4 Notwithstanding the above, the Court noted that no reply had been filed to the show cause notice and no personal hearing had been availed by the taxpayer, and that the adjudication order had been passed without the taxpayer's case being examined on merits.

2.5 Relying on its earlier decision in a similar matter where no reply had been filed and an ex parte order had been passed, the Court reiterated that an assessee ought to be afforded a proper opportunity to contest the matter on merits, and that lack of an effective hearing rendered the order liable to be interfered with.

Conclusions

2.6 The contention that service through the "Additional Notices Tab" vitiated the proceedings was rejected as untenable on the facts.

2.7 However, since the taxpayer did not get a proper opportunity to be heard and no reply was filed to the show cause notice prior to the ex parte order, the principles of natural justice warranted remand for fresh adjudication.

Issue 2: Approach to challenge to GST notifications extending limitation, in light of pending proceedings before the Supreme Court

Legal framework discussed

2.8 The Court referred to batches of writ petitions where notifications extending limitation under Section 168A of the Central Goods and Services Tax Act, 2017 and corresponding State enactments had been challenged, and noted divergent views of several High Courts and the pendency of these issues before the Supreme Court in a special leave petition.

2.9 The Court took note that another High Court had, in deference to judicial discipline, refrained from deciding the vires of Section 168A and the notifications, and had directed that the cases be governed by the Supreme Court's eventual decision.

Interpretation and reasoning

2.10 The Court observed that the validity of the key central notification (No. 56/2023-Central Tax) and related issues were squarely pending before the Supreme Court, and that several of its own earlier writ petitions had been disposed of by remanding matters or relegating parties to appellate remedies, with all such orders made subject to the outcome of the Supreme Court proceedings.

2.11 It noted that in some petitions involving parallel State notifications, matters had been retained for independent consideration, with a designated lead matter identified for that batch.

2.12 In the present case, the Court considered that the immediate grievance could be addressed by restoring an opportunity of hearing before the adjudicating authority, without deciding the constitutional or legal validity of the impugned notifications at this stage.

Conclusions

2.13 The Court refrained from adjudicating upon the validity or vires of the impugned notifications and left that issue open.

2.14 It directed that any fresh order passed on remand would be expressly subject to the outcome of the pending proceedings before the Supreme Court and the decision of the Court in the identified lead writ petition concerning State notifications.

Issue 3: Setting aside of ex parte order; remand with costs and directions for fresh adjudication

Interpretation and reasoning

2.15 Considering that the taxpayer had not filed any reply to the show cause notice, had not appeared for personal hearing, and that the impugned order had been passed without examining the taxpayer's case on merits, the Court held that an opportunity should now be afforded to contest the matter substantively.

2.16 Following its earlier approach in a comparable case, the Court found it appropriate to set aside the ex parte order and remand the matter to the adjudicating authority, while imposing costs on the taxpayer for the remand.

2.17 To ensure effective participation and communication, the Court directed that the notice of personal hearing be specifically communicated to the taxpayer on the email address and mobile number recorded in the order.

2.18 The Court further directed that access to the GST portal be provided within a specified period to enable the taxpayer to upload its reply and to access notices and related documents, thereby facilitating substantive adjudication.

Conclusions

2.19 The ex parte adjudication order was set aside, subject to the taxpayer paying costs of Rs. 20,000/- to the Delhi High Court Legal Services Committee.

2.20 The taxpayer was granted time up to a fixed date to file a reply to the show cause notice.

2.21 Upon filing of the reply, the adjudicating authority is required to issue a notice for personal hearing, communicate it via the specified email and mobile number, consider the reply and submissions made during the hearing, and pass a fresh, reasoned order on the show cause notice.

2.22 The fresh order to be passed on remand will be subject to the final decision of the Supreme Court on the validity of the relevant notifications and to the Court's decision in the identified lead case concerning State notifications, with all rights and remedies of the parties kept open.

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