Ex-Parte GST Order Remanded for Fresh Hearing; Challenge to Limitation Extension Notifications Kept Alive

Issue

Whether an ex parte adjudication order passed by the Sales Tax Officer is sustainable when the assessee failed to file a reply or appear for a personal hearing, and whether the High Court should intervene to provide a fresh opportunity in the interest of natural justice.

Facts

Period: Financial Year 2019-20.
The Default: The petitioner, a proprietorship concern, was issued a Show Cause Notice (SCN). The petitioner failed to file a reply to the SCN and did not avail of the opportunity for a personal hearing.
The Order: Consequently, the Adjudicating Authority passed an ex parte order determining the demand without hearing the petitioner on merits.
The Challenge: The petitioner approached the High Court claiming a breach of natural justice, seeking a chance to defend the case on its merits.

Decision

The High Court ruled in favour of the assessee.
Remand: The Court held that since the assessee did not get a “proper opportunity” to be heard (due to their own non-participation) and no reply was on record, the interest of justice required that the matter be remanded back to the Adjudicating Authority.
Fresh Opportunity: The order was set aside to allow the petitioner to file a reply and participate in a personal hearing.

Key Takeaways

Judicial Lenience: High Courts often exercise writ jurisdiction to set aside ex parte orders even when the fault lies with the taxpayer (non-appearance), preferring that tax demands be adjudicated on merits rather than procedural default.
Natural Justice: The principle of audi alteram partem is paramount. Courts ensure that a substantial demand is not confirmed without the assessee’s side being considered, provided the assessee is willing to cooperate upon remand.

II. Validity of Limitation Extension Notifications is Sub Judice

Issue

Whether the Central and State Notifications (specifically Notification No. 9/2023-Central Tax and Notification No. 56/2023-Central Tax) extending the time limit for passing adjudication orders for FY 2019-20 are legally valid.

Facts

The Challenge: The petitioner challenged the validity of the CBIC notifications that extended the limitation period for issuing orders under Section 73 for the FY 2019-20.
Notifications Involved:
- Notification No. 9/2023-Central Tax (dated 31-03-2023).
- Notification No. 56/2023-Central Tax (dated 28-12-2023).
- Parallel State Notification (dated 11-07-2024).

Decision

The High Court held that the challenge is subject to the outcome of pending litigation.
Supreme Court Seisin: The Court noted that the validity of the Central Notifications is currently pending consideration before the Supreme Court.
High Court Seisin: The validity of the corresponding State Notification is pending before the High Court.
Conditional Order: The final order passed by the Adjudicating Authority (upon remand) will be legally subject to the final verdict of the Supreme Court/High Court regarding the validity of these extension notifications.

Key Takeaways

Limitation Extension is Contested: The extensions granted by the government for FY 2017-18, 2018-19, and 2019-20 are under heavy judicial scrutiny.
Protective Measure: By raising this ground, the petitioner ensures that if the Supreme Court strikes down these notifications in the future, the demand against them (for 2019-20) will automatically be quashed as time-barred.

HIGH COURT OF DELHI

SPMS Abrasive

Union of India^*

PRATHIBA M. SINGH and SHAIL JAIN, JJ.

W.P.(C) No. 15238 OF 2025
CM APPL. No. 62474 OF 2025

OCTOBER 6, 2025

Vineet Bhatia, Adv. for the Petitioner. Sumit Batra, Adv. for the Respondent.

JUDGMENT

Prathiba M. Singh, J. – This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner – M/s SPMS Abrasive through its proprietor Mr. Manjeet, under Articles 226 and 227 of the Constitution of India, inter alia, challenging the impugned order dated 18^th August 2024 passed by the Sales Tax Officer Class II/Avato Ward 62, Zone-5, Delhi (hereinafter ‘impugned order’) for the Financial Year 2019-20. The present petition also challenges the impugned Show Cause Notice dated 8^th May 2024 (hereinafter ‘impugned SCN’).

3. Additionally, the present petition also challenges the vires of the following notifications:

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Notification No. 9/2023 – Central tax dated 31^st March 2023,

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Notification No. 56/2023- Central Tax dated 28^th December 2023,

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Notification No. 9/2023 – State Tax dated 22^nd June 2023,

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Notification No. 56/2023- State Tax dated 11^th July 2024 (hereinafter, ‘the impugned notifications’).

4. The challenge in the present petition is similar to a batch of petitions wherein inter alia, the impugned notifications were challenged. W.P.(C) No. 16499/2023 titled DJST Traders (P.) Ltd v. UOI (Delhi) was the lead matter in the said batch of petitions. On 22nd April 2025, the parties were heard at length qua the validity of the impugned notifications and accordingly, the following order was passed:

“4. Submissions have been heard in part. The broad challenge to both sets of Notifications is on the ground that the proper procedure was not followed prior to the issuance of the same. In terms of Section 168A, prior recommendation of the GST Council is essential for extending deadlines. In respect of Notification no.9, the recommendation was made prior to the issuance of the same. However, insofar as Notification No. 56/2023 (Central Tax) the challenge is that the extension was granted contrary to the mandate under Section 168A of the Central Goods and Services Tax Act, 2017 and ratification was given subsequent to the issuance of the notification. The notification incorrectly states that it was on the recommendation of the GST Council. Insofar as the Notification No. 56 of 2023 (State Tax) is concerned, the challenge is to the effect that the same was issued on 11th July, 2024 after the expiry of the limitation in terms of the Notification No.13 of 2022 (State Tax).

5. In fact, Notification Nos. 09 and 56 of 2023 (Central Tax) were challenged before various other High Courts. The Allahabad Court has upheld the validity of Notification no.9. The Patna High Court has upheld the validity of Notification no.56. Whereas, the Guwahati High Court has quashed Notification No. 56 of 2023 (Central Tax).

6. The Telangana High Court while not delving into the vires of the assailed notifications, made certain observations in respect of invalidity of Notification No. 56 of 2023 (Central Tax). This judgment of the Telangana High Court is now presently under consideration by the Supreme Court in S.L.P No 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax &Ors. The Supreme Court vide order dated 21st February, 2025, passed the following order in the said case:

“1. The subject matter of challenge before the High Court was to the legality, validity and propriety of the Notification No.13/2022 dated 5-7-2022 & Notification Nos.9 and 56 of 2023 dated 31-3-2023 & 8-12-2023 respectively.

2. However, in the present petition, we are concerned with Notification Nos.9 & 56/2023 dated 31-3-2023 respectively.

3. These Notifications have been issued in the purported exercise of power under Section 168 (A) of the Central Goods and Services Tax Act. 2017 (for short, the “GST Act”).

4. We have heard Dr. S. Muralidhar, the learned Senior counsel appearing for the petitioner.

5. The issue that falls for the consideration of this Court is whether the time limit for adjudication of show cause notice and passing order under Section 73 of the GST Act and SGST Act (Telangana GST Act) for financial year 2019-2020 could have been extended by issuing the Notifications in question under Section 168-A of the GST Act.

6. There are many other issues also arising for consideration in this matter.

7. Dr. Muralidhar pointed out that there is a cleavage of opinion amongst different High Courts of the country. 8. Issue notice on the SLP as also on the prayer for interim relief, returnable on 7-32025.”

7. In the meantime, the challenges were also pending before the Bombay High Court and the Punjab and Haryana High Court. In the Punjab and Haryana High Court vide order dated 12th March, 2025, all the writ petitions have been disposed of in terms of the interim orders passed therein. The operative portion of the said order reads as under:

“65. Almost all the issues, which have been raised before us in these present connected cases and have been noticed hereinabove, are the subject matter of the Hon’ble Supreme Court in the aforesaid SLP.

66. Keeping in view the judicial discipline, we refrain from giving our opinion with respect to the vires of Section 168-A of the Act as well as the notifications issued in purported exercise of power under Section 168-A of the Act which have been challenged, and we direct that all these present connected cases shall be governed by the judgment passed by the Hon’ble Supreme Court and the decision thereto shall be binding on these cases too.

67. Since the matter is pending before the Hon’ble Supreme Court, the interim order passed in the present cases, would continue to operate and would be governed by the final adjudication by the Supreme Court on the issues in the aforesaid SLP-4240-2025.

68. In view of the aforesaid, all these connected cases are disposed of accordingly along with pending applications, if any.”

8.The Court has heard Id. Counsels for the parties for a substantial period today. A perusal of the above would show that various High Courts have taken a view and the matter is squarely now pending before the Supreme Court.

9. Apart from the challenge to the notifications itself, various counsels submit that even if the same are upheld, they would still pray for relief for the parties as the Petitioners have been unable to file replies due to several reasons and were unable to avail of personal hearings in most cases. In effect therefore in most cases the adjudication orders are passed ex-parte. Huge demands have been raised and even penalties have been imposed.

10. Broadly, there are six categories of cases which are pending before this Court. While the issue concerning the validity of the impugned notifications is presently under consideration before the Supreme Court, this Court is of the prima facie view that, depending upon the categories of petitions, orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases, proceedings including appellate remedies may be permitted to be pursued by the Petitioners, without delving into the question of the validity of the said notifications at this stage.

11. The said categories and proposed reliefs have been broadly put to the parties today. They may seek instructions and revert by tomorrow i.e., 23rd April, 2025. “

5. The abovementioned writ petition and various other writ petitions have been disposed of by this Court on subsequent dates, either remanding the matters or relegating the parties to avail of their appellate remedies, depending upon the factual situation. All such orders are subject to further orders of the Supreme Court in S.L.P No 4240/2025 titled HCC-SEW-Meil-AAG JV v. Asstt. Commissioner of State Tax (SC).

6. As observed by this Court in the order dated 22^nd April 2025 as well, since the challenge to the above mentioned notifications is presently under consideration before the Supreme Court in HCC-SEW-MEIL-AAG JV (supra), the challenge made by the Petitioner to the impugned notifications in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court.

7. However, in cases where the challenge is to the parallel State Notifications, the same have been retained for consideration by this Court. The lead matter in the said batch is Engineers India Ltd. v. UOI [W.P. (C) No. 9214 of 2024, dated 23-4-2025].

8. On facts however, the impugned SCN was issued to the Petitioner on 8^th May 2024. The submission of the Petitioner is that no reply has been filed by the Petitioner to the impugned SCN, nor any personal hearing has been availed by the Petitioner. Thus, the impugned order has been passed without hearing the Petitioner on merits.

9. The Court has heard the parties. This Court in Sugandha Enterprises v. Commissioner of DGST (Delhi)/W.P.(C) 4779/2025 under similar circumstances where no reply was filed to the SCN had remanded the matter in the following terms:

“6. On facts, however, the submission of the Petitioner in the present petition is that the Petitioner was not afforded with an opportunity to file a reply to the SCN dated 23rd May, 2024 and the impugned order was passed without affording the Petitioner with an opportunity to be heard. Hence, the impugned order is a non-speaking order and is liable to be set aside on the said ground.

7. Heard. The Court has considered the submissions made. The Court has perused the records. In this petition, as mentioned above, no reply to the SCN has been filed by the Petitioner. Relevant portion of the impugned order reads as under:

And whereas, the taxpayer had neither deposited the proposed demand nor filed their objections/ reply in DRC-06 within the stipulated period of time, therefore, following the Principle of Natural Justice, the taxpayer was granted opportunities of personal hearing for submission of their reply/objections against the proposed demand before passing any adverse order.

And whereas, neither the taxpayer filed objections/reply in DRC 06 nor appeared for personal hearing despite giving sufficient opportunities, therefore, the undersigned is left with no other option but to upheld the demand raised in SCN/DRC 01. DRC 07 is issued accordingly.

8. This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCNand the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner to contest the matter on merits.

9. Accordingly, the impugned order is set aside. The Petitioner is granted 30 days’ time to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:….”

10. Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the impugned SCN has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority.

11. Accordingly, the impugned order is set aside. The Petitioner is granted time till 30^th November 2025, to file the reply to impugned SCN. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:

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Mobile No.: 9811081159

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E-mail Address: bhatiav68@gmail. com,

12. The reply filed by the Petitioner to the impugned SCN, along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority, and a fresh order with respect to the impugned SCN shall be passed accordingly.

13. However, it is made clear that the issue in respect of the validity of the impugned notifications is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court in HCC-SEW-MEIL-AAG JV (supra) and this Court in Engineers India Ltd. (supra).

14. The petition is disposed of in above terms. All pending applications, if any, are also disposed of.