I. GST demand order set aside and remanded due to denial of proper hearing opportunity.
II. Challenge to GST limitation extension notification is stayed pending Supreme Court’s decision.
I. GST Demand Order Set Aside and Remanded Due to Denial of Proper Hearing Opportunity.
Issue:
Whether a GST demand order passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), should be set aside and the matter remanded if the assessee’s reply was allegedly not considered and a proper personal hearing was not granted.
Facts:
- A show cause notice (SCN) was issued to the assessee, and subsequently, an order was passed.
- The assessee challenged this order in a writ petition, contending that the impugned order suffered from “legal infirmities” because it failed to consider their reply and a proper personal hearing was not granted.
Decision I:
The court held in favor of the assessee. Considering the fact that the assessee was not granted a proper opportunity to be heard, the court ruled that the matter was to be remanded back to the Adjudicating Authority, and a personal hearing was to be granted to the assessee.
Key Takeaways I:
- Fundamental Right to be Heard: The decision reiterates the paramount importance of providing a proper opportunity of hearing, including a personal hearing, to an assessee before passing any adverse order. This is a bedrock principle of natural justice.
- “Proper Opportunity”: The court’s finding that a “proper opportunity” was not granted indicates that even if some communication occurred, it was insufficient to meet the legal standard of fairness. This could stem from non-consideration of a filed reply or the absence of a meaningful personal hearing.
- Consequences of Violation: An order passed in violation of natural justice is deemed procedurally defective and unsustainable.
- Remedy of Remand: The standard judicial remedy for such procedural violations is to set aside the order and send the case back to the original authority (Adjudicating Authority) with clear directions to conduct fresh proceedings after providing the necessary opportunity for a personal hearing.
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 challenged the validity of Notification No. 56/2023-Central Tax, dated December 28, 2023.
- This notification, issued by the Central Board of Indirect Taxes and Customs (CBIC), extended the time limit for passing orders under Section 73(9) (which specifies the time limit for issuing assessment orders in non-fraud cases).
- It was brought to the court’s attention that the matter concerning the validity of this notification 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 held that 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, as the matter was pending before the apex court. This implies a stay on this particular aspect of the writ petition.
Key Takeaways II:
- Judicial Comity and Restraint: High Courts typically defer to the Supreme Court on questions of law that are already under its consideration. This ensures consistency in legal interpretation and efficient use of judicial resources.
- Significance of Limitation Extensions: Notifications extending limitation periods are critical in tax law as they impact the finality of assessments. Their legal validity is a substantial question of law.
- “Subject to Outcome”: This means the High Court did not dismiss the assessee’s challenge to the notification outright but rather kept it alive, making its resolution contingent upon the Supreme Court’s decision. This is a procedural relief for the assessee.
- Impact of Supreme Court Decision: The Supreme Court’s verdict on the validity of such notifications will have a binding effect on all courts and tax authorities, determining the validity of assessment orders passed within these extended periods.
- “Partly in favour of assessee/Matter stayed”: While the outcome of the stay is a procedural win for the assessee (as their challenge is not dismissed), it’s important to note that it’s not a definitive ruling on the merits of the notification’s validity.
HIGH COURT OF DELHI
Damanpreet Singh
v.
Union of India
PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.
W.P.(C) No. 420 of 2025
CM APPL. No. 2093 of 2025
CM APPL. No. 2093 of 2025
MAY 7, 2025
Batra and Ms. Nisha Mohandas, 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 – Damanpreet Singh (Prop. M/S Ace Enterprises) under Article 226 of the Constitution of India challenging the Show Cause Notice dated 4th December, 2023 (hereinafter, ‘the SCN’) issued by the office of Sales Tax Officer Class II/ AVATO, Delhi (hereinafter, ‘Sales Tax Officer’) as also the consequent order dated 6th April, 2024 passed by the Sales Tax Officer (hereinafter, ‘the impugned order’).
3. The petition also challenges the vires of Notification No. 56/2023- Central Tax dated 28th December, 2023 (hereinafter ‘impugned notification’).
4. The validity of the impugned notifications was under consideration before this Court in a batch of petitions with the lead petition being DJST Traders (P.) Ltd. v. Union of India (Delhi)/ 16499/2023 titled. 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 7-3-2025.” |
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. On facts, however, it is the case of the Petitioner that the impugned order suffers from legal infirmities as it fails to consider the reply. Further, a proper personal hearing has not been granted.
7. Considering the fact that the Petitioner has not been granted a proper opportunity to be heard, in the opinion of the Court, the matter deserves to be remanded back to the concerned Adjudicating Authority. Let a reply be filed by 10th July, 2025.
8. A personal hearing shall be granted to the Petitioner and the notice for the same shall be sent on the following email address:
email id- nit.gulati@yahoo.com
9. 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. Asstt. Commissioner of State Tax [S.L.P No. 4240 of 2025, dated 21-2-2025].
10. All the rights and remedies of the parties are left open. Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable filing of reply and access to the notices and related documents.
11. Accordingly, the impugned order is set aside and the petition is disposed of in these terms. All pending applications are also disposed of.