2026 (1) TMI 503 - HC - GST

GST tax notifications and assessment order challenged for lack of fair hearing; assessment set aside, notifications invalidated, case remanded.

The dominant issue was whether the impugned GST notifications and the consequential assessment order were legally sustainable, particularly in light of ... Validity of N/Ns. 09/2023 & 56/2023 issued by the GST Council and the consequential assessment order dated 30.07.2024 passed by the 1st respondent - Violation of principles of natural justice - HELD THAT:- It is clear that though the proceedings initiated by the respondent is valid, the impugned assessment order came to be passed in violation of principles of natural justice. In such view of the matter, this Court feels that it would be appropriate to provide an opportunity to the petitioner to establish his case before the respondent. The impugned Notification Nos.09/2023 dated 31.03.2023 and 56/2023 dated 28.12.2023 stand vitiated and illegal - The impugned order dated 30.07.2024 is hereby set aside and the matter is remanded back to the 1st respondent for fresh consideration. Petition disposed off by way of remand. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether Notification Nos. 09/2023 and 56/2023 were legally valid, or stood vitiated and illegal. (ii) Whether, despite illegality of the said notifications, the initiation of proceedings by applying Section 168A (in light of the Supreme Court's extension of time) was valid. (iii) Whether the assessment order dated 30.07.2024 was liable to be set aside for violation of principles of natural justice, and what consequential directions were warranted (including opportunity to file objections and grant of personal hearing), particularly where the order was passed in the name of a deceased person and the legal heir sought to respond. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Validity of Notification Nos. 09/2023 and 56/2023 Legal framework (as discussed by the Court): The Court relied on its earlier common order (dated 12.06.2025) which examined the effect of the Supreme Court's extension of limitation and the object/scope of Section 168A as applied to limitation under Section 73. Interpretation and reasoning: Following the binding determination in the earlier common order, the Court accepted that the impugned notifications were incompatible with the limitation position flowing from the Supreme Court's extension and were therefore unsustainable on the grounds recorded in that earlier decision (including that they were contrary to the object of Section 168A and suffered from arbitrariness). Conclusion: The Court held that Notification Nos. 09/2023 and 56/2023 stand vitiated and illegal. Issue (ii): Validity of initiation of proceedings by applying Section 168A despite illegality of the notifications Legal framework (as discussed by the Court): The Court considered the extension of time limits by the Supreme Court in the suo motu proceedings and the respondent's invocation of Section 168A for initiating proceedings. Interpretation and reasoning: The Court distinguished between (a) the illegality of the impugned notifications and (b) the permissibility of initiating proceedings when limitation stood extended by the Supreme Court. On that basis, it concluded that the respondent's initiation of proceedings, when tested against the Supreme Court's extension of time, could be sustained. Conclusion: The Court held that, in the present case, the initiation of proceedings by applying Section 168A was valid, notwithstanding that the impugned notifications themselves were illegal. Issue (iii): Whether the assessment order required interference for breach of natural justice and the appropriate remand directions Legal framework (as discussed by the Court): The Court applied the principles of natural justice, specifically the requirement of affording an opportunity to submit a reply and a personal hearing before finalising an assessment. Interpretation and reasoning: The Court accepted the petitioner's submission (confirmed by the respondents) that the assessment order had been passed without providing an opportunity of personal hearing and that the petitioner was not in a position to file a reply at the relevant time. The Court also noted the circumstance that the order was passed in the name of the petitioner's father, who had died after the order, and that the legal heir sought to file a reply and substantiate the case. Since the proceedings could validly be initiated, but the culmination in an assessment order suffered from breach of natural justice, the proper course was to set aside the assessment and remand for fresh consideration with procedural safeguards. Conclusion: The Court set aside the assessment order dated 30.07.2024 and remanded the matter for fresh consideration; it directed the legal heir to file objections (with documents) to the show cause notice dated 19.05.2024 within four weeks; and it directed the authority to thereafter issue a 14 days clear notice fixing the date of personal hearing and to pass fresh orders on merits in accordance with law expeditiously.