GST Demand order passed after considering the assessee’s reply is not subject to High Court interference;

I. Demand order passed after considering the assessee’s reply is not subject to High Court interference; direct appeal is the appropriate remedy.

II. Challenge to GST limitation extension notification is stayed pending Supreme Court’s decision.

I. Demand Order Passed After Considering Reply: Appeal is the Remedy, Not Writ.

Issue:

Whether a writ petition challenging a demand order passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), should be entertained when the assessee claims their reply to the show cause notice was not considered, but the order itself is detailed and appealable.

Facts:

• For the period 2019-20, a Show Cause Notice (SCN) was issued to the petitioner, raising a demand.
• The petitioner filed a reply to the SCN.
• An impugned order was subsequently passed, raising the demand on the petitioner.
• The petitioner contended that the impugned order was passed solely due to the retrospective cancellation of registration of supplying dealers and that their reply to the SCN was not considered while passing the order.

Decision I:

The court ruled in favor of the revenue. It held that the impugned order was “detailed in nature” and had been passed after “duly considering” the reply of the petitioner along with the supporting documents filed. Therefore, the impugned order did not merit any interference from the Court, and any challenge should be taken up by the Petitioner before the appellate authority in appeal (under Section 107 of the CGST/DGST Act, 2017).

Key Takeaways I:

• Writ Jurisdiction vs. Alternate Remedy: High Courts generally exercise restraint in their writ jurisdiction (under Article 226 of the Constitution) when an effective alternate statutory remedy (like an appeal under Section 107) is available. The assessee is usually required to exhaust the statutory remedies first.
• Proof of Consideration: The court examined the impugned order itself and found it to be detailed, indicating that the Adjudicating Authority had applied its mind and considered the reply and documents. This contradicts the assessee’s claim of non-consideration.
• “Solely on Account of Cancellation”: The assessee’s argument that the order was passed solely due to supplier cancellation, without considering their reply, was not accepted by the court, implying that the detailed order did address the arguments.
• Factual Disputes in Appeal: Disputes regarding the merits of the demand, factual aspects (like the genuineness of supplier cancellation’s impact), and whether the reply was adequately considered, are best addressed by the appellate authority, which is equipped to review facts and law.
• No Violation of Natural Justice: When a reply is filed and the order is detailed, indicating consideration, the argument of “no opportunity of hearing” or “non-consideration of reply” typically fails, thus removing a common ground for invoking writ jurisdiction.

II. Challenge to GST Limitation Extension Notification Stayed Pending Supreme Court Decision.

Issue:

Whether a High Court should proceed with a challenge to the validity of Notification No. 9/2023-Central Tax, dated March 31, 2023 (issued under Section 168A of the CGST Act, 2017, for extending limitation periods), when the same matter is pending consideration before the Supreme Court.

Facts:

• For the period 2019-20, the assessee challenged the validity of Notification No. 9/2023-Central Tax, dated March 31, 2023, issued by the Central Board of Indirect Taxes and Customs (CBIC). This notification extended certain limitation periods under the CGST Act, 2017, using powers under Section 168A (Power to issue removal of difficulty orders in certain circumstances).
• It was brought to the court’s attention that the matter of challenging this notification was pending consideration before the Supreme Court in the case of HCC-SEW-MEIL-AAG JV v. Asstt. Commissioner of State Tax [S.L.P No. 4240 of 2025, dated 21-2-2025].

Decision II:

The court held that since the matter was pending consideration before the Supreme Court, the challenge made by the assessee to the notification in the present proceedings would be subject to the outcome of the decision of the Supreme Court. The matter was effectively stayed on this point.

Key Takeaways II:

• Judicial Propriety/Comity: When a higher court (especially the Supreme Court) is seized of a similar or identical legal question, lower courts (High Courts) generally exercise judicial restraint and either adjourn or stay proceedings awaiting the pronouncement from the higher court. This ensures consistency in law and avoids conflicting judgments.
• Significance of Section 168A and Extension of Limitation: Section 168A of the CGST Act grants powers to the government to extend time limits in specific circumstances (e.g., during pandemics or other extraordinary situations). The validity of such extensions, particularly how they might impact the fundamental right to closure of assessments, is a significant legal question that warrants Supreme Court adjudication.
• Impact on Taxpayers: The outcome of the Supreme Court’s decision will have widespread implications for numerous taxpayers whose assessments or demands might fall within the extended limitation periods.
• “Partly in Favour of Assessee/Matter Stayed”: This indicates that while the court did not rule on the merits of the notification’s validity (thus not a full win for the assessee), it also did not dismiss the challenge outright. By staying the matter, it keeps the assessee’s challenge alive, contingent on the Supreme Court’s final decision, which is a procedural relief for the assessee.