GST Demand order set aside due to improper SCN upload and denied personal hearing, even if portal issue was later rectified.

I. GST Demand order set aside due to improper SCN upload and denied personal hearing, even if portal issue was later rectified.

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

I. Demand Order Set Aside Due to Improper SCN Upload and Denied Personal Hearing.

Issue:

Whether a demand order passed under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) is liable to be set aside if the Show Cause Notice (SCN) was uploaded on an “Additional Notices Tab” on the portal, leading to the assessee’s contention of non-receipt/non-knowledge, and the order was passed without providing a personal hearing, even if the department claims the portal was rectified later.

Facts:

For the period 2019-20, an SCN was issued to the assessee.
The SCN was uploaded on the GST portal under the “Additional Notices Tab.”
The assessee contended that due to this specific uploading location, the SCN was not brought to its knowledge, and consequently, the impugned demand order was passed without providing the assessee a personal hearing.
The Department argued that the portal issue (where notices might not have been readily visible under the main tab) was rectified after January 16, 2024, and therefore, notices should have been visible to the assessee.
It’s implied that the SCN was issued post-January 16, 2024, given the department’s argument.

Decision I:

The court held in favor of the assessee. Even though the SCN was issued post-January 16, 2024 (when the portal rectification was claimed), the court considered the assessee’s plea that it did not get an opportunity to file a reply to the SCN. Therefore, the impugned order was set aside. The Adjudicating Authority was directed to pass a fresh order after affording an opportunity of personal hearing to the assessee. The matter was remanded.

Key Takeaways I:

Effective Communication of Notices: The primary responsibility lies with the tax department to ensure that notices and communications are effectively brought to the knowledge of the assessee. Merely uploading a notice on a portal, especially under a less obvious or potentially problematic tab, may not be considered effective service if the assessee genuinely claims lack of knowledge.
Principles of Natural Justice: The judgment strongly upholds the principles of natural justice. Denying an assessee the opportunity to file a reply to an SCN and a personal hearing before passing a demand order is a fundamental procedural flaw.
Balancing Departmental Rectification with Assessee’s Rights: Even if the department rectified a portal issue, if the assessee still suffered a lack of opportunity due to the initial placement or communication failure, the court prioritizes the assessee’s right to be heard.
Remand as Remedy: The usual remedy for such procedural violations is to set aside the order and remand the matter back to the lower authority, directing them to proceed afresh after providing a proper opportunity to the assessee.

II. Challenge to GST Limitation Extension Notifications 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, and Notification No. 56/2023-Central Tax, dated December 28, 2023, concerning the extension of limitation periods under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), when the same legal question is pending consideration before the Supreme Court.

Facts II:

For the period 2019-20, the assessee challenged the validity of two Central Tax Notifications:
- Notification No. 9/2023-Central Tax, dated March 31, 2023.
- Notification No. 56/2023-Central Tax, dated December 28, 2023.
These notifications, issued under Section 168A of the CGST Act, 2017 (Power to issue removal of difficulty orders), extended various limitation periods.
It was brought to the court’s attention that the larger issue of the validity of such notifications extending limitation periods was pending consideration before the Supreme Court in HCC-SEW-MEIL-AAG JV v. Asstt. Commissioner of State Tax [S.L.P. No. 4240 of 2025, dated February 21, 2025].

Decision II:

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

Key Takeaways II:

Judicial Discipline and Comity: High Courts typically defer to the Supreme Court on questions of law already under its consideration. This practice ensures consistency in legal interpretation across the country and avoids contradictory judgments.
Significance of Section 168A Notifications: Notifications issued under Section 168A (similar to Section 168A in Income Tax for certain aspects) are significant as they impact procedural timelines and potentially affect the fundamental rights of taxpayers (e.g., right to finality of assessment).
Stay of Proceedings: The court’s decision to “stay” the challenge to the notifications means that the High Court will not decide on its validity until the Supreme Court pronounces its judgment on the matter. This benefits the assessee by keeping their challenge alive.
No definitive ruling: This part of the decision is not a definitive ruling on the merits of the notification’s validity by the High Court, but rather a procedural step in light of the ongoing Supreme Court case. The ultimate outcome for the assessee on this specific point will depend entirely on the Supreme Court’s verdict.

HIGH COURT OF DELHI

Tanishka Steel

Commissioner Delhi Goods and Service Tax

PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.

W.P.(C) No. 14982 OF 2024
CM APPL. No. 62809 OF 2024

MAY 6, 2025

Rakesh Kumar, Parveen Gambhir and Akul Mangla, Advs. for the Petitioner. Arun Khatri, SSC, Ms. Anoushka Bhalla and Sahil Khurana, Advs. for the Respondent.

ORDER

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

2. The present petition has been filed by the Petitioner-Tanishka Steel under Articles 226 & 227 of the Constitution of India challenging the show cause notice dated 28th May, 2024 (hereinafter, ‘the SCN’) issued by the Office of the Goods and Service Tax Officer, Department of Trade and Taxes, GNCTD, pertaining to the Financial Year 2019-20, as also the consequent order dated 27th August, 2024 passed by the office of Sales Tax Officer Class II/ AVATO, Delhi (hereinafter, ‘the impugned order’).

3. The petition also challenges the vires of Notification No. 9/2023-Central Tax dated 31st March, 2023 and Notification No. 56/2023- Central Tax dated 28th December, 2023 (hereinafter ‘impugned notifications’).

4. The validity of the impugned notifications was under consideration before this Court in a batch of petitions with the lead petition being W.P.(C) 16499/2023 titled ‘ DJST Traders (P.) Ltd. v. Union of India(Delhi)‘. 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 HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax [S.L.P No. 4240 of 2025, dated 21-2-2025] titled, 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 7-3-2025.”

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. Thereafter, on 23rd April, 2025, this Court, having noted that the validity of the impugned notifications is under consideration before the Supreme Court, had disposed of several matters in the said batch of petitions after addressing other factual issues raised in the respective petitions. Additionally, while disposing of the said petitions, this Court clearly observed that the validity of the impugned notifications therein shall be subject to the outcome of the proceedings before the Supreme Court.

6. In the present case, the submission of the Petitioner, on facts is that the SCN dated 28th May, 2024, from which the impugned order arises, was uploaded on the ‘Additional Notices Tab’. Therefore, the same was not brought to the knowledge of the Petitioner due to which no reply was filed. Hence, the impugned order was passed without providing the Petitioner with an opportunity to challenge the case on merits.

7. On the other hand, ld. Counsel for the Respondent-Department submits that the SCN in the present case was issued after 16th January, 2024, subsequent to which the Respondent-Department had rectified the portal and ensured that the notices uploaded thereon were made visible.

8. The Court has heard the parties. In fact, this Court in W.P.(C) 13727/2024 titled ‘ Neelgiri Machinery v. Commissioner Delhi GST(Delhi) ‘, under similar circumstances where the SCN was uploaded on the ‘Additional Notices Tab’ had remanded the matter in the following terms:

“6. Be that as it may, intention is to ensure that the Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default. Since there is no clarity on behalf of the Department, this Court follows the order dated 9th September, 2024 in Satish Chand Mittal (Trade Name National Rubber Products) v. Sales Tax Officer SGST, Ward 25-Zone 1 as also order dated 23rd December, 2024 in Anant Wire Industries v. Sales Tax Officers Class II/Avato, Ward 83 & Anr (W.P.(C) 17867/2024; DHC) where the Court under similar circumstances has remanded back the matter to ensure the Noticee/petitioners get a fair opportunity to be heard. The order of the Court in Sathish Chand Mittal (supra) reads as under:

“4. It is the petitioner’s case that he had not received the impugned SCN and, therefore, he had no opportunity to respond to the same. For the same reason, the petitioner claims that he had not appear for a personal hearing before the Adjudicating Authority, which was scheduled on 17.10.2023 and later rescheduled to 30.11.2023 as per the Reminder.

5. The petitioner also states that the impugned SCN, the Reminder and the impugned order are unsigned.

6. Mr. Singhvi, the learned counsel appearing for the respondent, on advance notice,fairly states that the principal issue involved in the present case is squarely covered by the decisions of this Court in M/s ACE Cardiopathy Solutions Private Ltd. v. Union of India & Ors.: Neutral Citation No. 2024:DHC:4108-DB as well as in Kamla Vohra v. Sales Tax Officer Class II/ Avato Ward 52 : Neutral Citation No.2024:DHC:5108- DB.

7. He states that possibly, the petitioner did not had the access of the Notices as they were projected on the GST Portal under the tab Additional Notices & Orders’. He submits that the said issue has now been addressed and the Additional Notices & Orders’ tab is placed under the general menu and adjacent to the tab ‘Notices & Orders’.

8. In view of the above, the present petition is allowed and the impugned order is set aside.

9. The respondent is granted another opportunity to reply to the impugned SCN within a period of two weeks from date. The Adjudicating Authority shall consider the same and pass such order, as it deems fit, after affording the petitioner an opportunity to be heard. 10. The present petition is disposed of in the aforesaid terms. 11. All pending applications are also disposed of.”

7. The impugned demand orders dated 23rd April, 2024 and 5th December, 2023 are accordingly set aside. In response to show cause notices dated 04th December, 2023 and 23th September, 2023, the Petitioner shall file its replies within thirty days. The hearing notices shall now not be merely uploaded on the portal but shall also be e-mailed to the Petitioner and upon the hearing notice being received, the Petitioner would appear before the Department and make its submissions. The show cause notices shall be adjudicated in accordance with law.

8. The petitions are disposed of in the above terms. The pending application(s), if any, also stand disposed of.”

9. There is no doubt that after 16th January 2024, changes have been made to the GST portal and the ‘Additional Notices Tab’ has been made visible. However, in the present case, the writ petition was filed in the year 2024, raising issues as to the validity of the impugned notifications. Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority.

10. Accordingly, the impugned order is set aside. The Petitioner is granted time till 10th July 2025, to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:

Email ID: gambhirpk 7@gmail. com

Mobile: 9810220294

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

12. 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 v. Assistant Commissioner of State Tax [S.L.P No. 4240 of 2025, dated 21-2-2025].

13. All rights and remedies of the parties are left open. Access to the GST Portal, shall be provided to the Petitioner to enable uploading of the reply as also access to the notices and related documents.

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