I. GST demand order set aside due to improper SCN upload and denied personal hearing.
II. Challenge to GST limitation extension notification is stayed pending Supreme Court’s decision.
I. GST Demand Order Set Aside Due to SCN Upload in Wrong Portal Tab and Denied Personal Hearing.
Issue:
Whether a demand order created under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), is valid if the Show Cause Notice (SCN) was uploaded on the “Additional Notices Tab” on the GST portal, preventing it from coming to the assessee’s knowledge, and the order was subsequently passed without affording the assessee a personal hearing or an opportunity to file a reply.
Facts:
- For the period April 2018 to March 2019, a demand was created against the assessee.
- A show cause notice (SCN) related to this demand was uploaded on the “Additional Notices Tab” of the GST portal.
- The assessee contended that due to this method of uploading, the SCN did not come to their knowledge.
- Consequently, the impugned demand order was passed without providing the assessee a personal hearing and in the absence of any reply from the assessee.
Decision I:
The court held in favor of the assessee. It ruled that since the show cause notice was uploaded on the “Additional Notices Tab” and therefore did not come to the knowledge of the assessee, and the impugned order was passed without providing the assessee a personal hearing and in the absence of a reply, the impugned demand order was to be set aside.
Key Takeaways I:
- Effective Communication of Notice: The fundamental requirement for effective service of a Show Cause Notice (SCN) is that it must genuinely come to the knowledge of the assessee. Uploading a notice on a less obvious or “additional” tab on a portal, especially if it leads to a genuine claim of non-knowledge, fails this test.
- Violation of Natural Justice: Passing a demand order without the assessee having knowledge of the SCN, and consequently without an opportunity to file a reply or be heard in person, is a clear and direct violation of the principles of natural justice (audi alteram partem).
- Consequence of Violation: Orders passed in violation of fundamental principles of natural justice are deemed procedurally flawed and are typically set aside by courts.
- Remand Implied: While the decision explicitly states the order is “set aside,” the usual implication of such rulings is that the matter is remanded back to the adjudicating authority to pass a fresh order after providing proper notice and opportunity to the assessee.
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. 56/2023-Central Tax, dated December 28, 2023 (extending the time limit for passing orders under Section 73(9) of the CGST Act), when the same legal question is already pending before the Supreme Court.
Facts II:
- The assessee had impugned (challenged) Notification No. 56/2023-Central Tax, dated December 28, 2023.
- This notification extended the time limit for passing orders under Section 73(9) of the CGST Act for Financial Year 2018-19 up to April 30, 2024, and for Financial Year 2019-20 up to August 31, 2024.
- It was brought to the court’s attention that the challenge to this notification was under consideration before the Supreme Court in MHCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors., S.L.P No. 4240/2025.
Decision II:
The court held that the challenge made by the assessee to the notification in the present proceedings would also be subject to the outcome of the decision in the said Supreme Court SLP, as the matter was pending before the apex court. The ruling was in favor of the assessee on this point, implying the High Court would not rule on the validity of the notification itself but keep the challenge alive pending the apex court’s decision.
Key Takeaways II:
- Judicial Comity: High Courts consistently defer to the Supreme Court on questions of law that are already being litigated before the apex court. This ensures uniformity and avoids conflicting judgments.
- Significance of Limitation Extension: The extension of time limits for passing assessment orders is a crucial procedural aspect in tax law, directly impacting the finality of assessments. Challenges to such extensions often involve fundamental legal questions.
- “Subject to Outcome”: This means the High Court did not dismiss the assessee’s challenge to the notification’s validity. Instead, it effectively stayed the decision on that point, making it contingent on the Supreme Court’s ruling. This is a procedural relief for the assessee, as their challenge remains open.
- Impact of Supreme Court Decision: The Supreme Court’s verdict on the validity of such notifications will have a binding effect on all High Courts and tax authorities, determining whether assessments passed within the extended period are valid.
CMAPPL. No. 18071 of 2025
“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.”
“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.”
“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.”