Demand Order Passed Without Assessee’s Knowledge of SCN Due to Portal Suspension is Invalid, Remanded for Fresh Adjudication

By | June 3, 2025
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I. Demand Order Passed Without Assessee’s Knowledge of SCN Due to Portal Suspension is Invalid, Remanded for Fresh Adjudication

Issue:

Whether a demand order passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act), is valid if the assessee’s GST registration was cancelled prior to the issuance of the show cause notice (SCN), leading to the assessee having no access to the portal and thus no knowledge of the SCN.

Facts:

A show cause notice (SCN) was issued, and subsequently, an impugned order in original was passed under Section 73 of the CGST Act. The assessee contended that their GST registration had been cancelled prior to the issuance of the SCN. As a result, the assessee did not have access to the GST portal and consequently had no knowledge of the SCN or the subsequent proceedings. It was acknowledged that no reply was filed and a granted personal hearing was not availed by the assessee.

Decision:

The court held that, in view of the fact that the assessee’s registration stood suspended at the relevant time and no reply was filed (due to lack of knowledge), and even though a personal hearing was granted but not availed (again, due to lack of knowledge), the assessee ought to be provided another opportunity to be heard on merits. Accordingly, the matter was remanded, and the assessee was granted time to file a reply to the SCN, following which a fresh order was to be passed.

Key Takeaways:

  • Effective Communication of SCN: For a show cause notice to be effective and for natural justice to be served, the assessee must have actual knowledge of its issuance and contents.
  • Impact of Portal Suspension/Cancellation: When an assessee’s GST registration is cancelled or suspended, their access to the official GST portal, which is a primary mode of communication, is hindered. This can lead to a legitimate lack of knowledge regarding SCNs and other official communications.
  • Opportunity of Being Heard: The right to an opportunity of being heard is paramount. If an assessee can demonstrate that they genuinely did not receive or could not access the SCN due to circumstances like portal suspension/cancellation, even if a hearing was nominally “granted,” it means no effective opportunity was provided.
  • Remand for Fresh Adjudication: In such cases, the proper course of action is to set aside the order and remand the matter for fresh adjudication, ensuring the assessee is given a proper opportunity to respond to the SCN and be heard.

II. Validity of GST Limitation Period Extension Notifications Subject to Supreme Court Decision

Issue:

Whether the validity of CBIC Notification Nos. 9/2023-Central Tax, dated 31-03-2023, and 56/2023-Central Tax, dated 28-12-2023 (which likely extend limitation periods for demand orders under Section 168A of the CGST Act), is legally sound.

Facts:

The assessee challenged the validity of CBIC Notification Nos. 9/2023-Central Tax, dated 31-03-2023, and 56/2023-Central Tax, dated 28-12-2023. These notifications are generally issued by the Central Board of Indirect Taxes and Customs (CBIC) under Section 168A of the CGST Act, which grants power to extend various time limits in situations of force majeure or other specific circumstances.

Decision:

The court noted that a similar matter concerning the validity of these notifications was already 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 21-02-2025). Therefore, the challenge made by the assessee to these notifications in the present proceedings would be subject to the outcome of the Supreme Court’s decision.

Key Takeaways:

  • Judicial Deference to Supreme Court: When a fundamental legal question, such as the constitutional or statutory validity of government notifications, is pending before the Supreme Court, lower courts typically stay proceedings or make their decisions contingent on the apex court’s pronouncement.
  • Scope of Section 168A: The core legal dispute revolves around the interpretation and application of Section 168A of the CGST Act, which allows for the extension of time limits. The Supreme Court’s decision will provide a definitive interpretation of the permissible scope and conditions for such extensions.
  • Impact on Time-Barred Demands: The validity of these notifications is crucial for numerous demand cases, as they directly impact whether certain tax demands, issued after the original limitation period but within the extended period, are legally tenable.
  • Matter Stayed: The case being “stayed” means that further proceedings related to the demand (specifically the aspect dependent on these notifications’ validity) are put on hold, awaiting the Supreme Court’s final ruling, which will provide clarity and bind all lower courts.
HIGH COURT OF DELHI
Jinender Paper Mart
v.
Sales Tax Officer, AVATO
PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.
W.P. (C) No. 13671 OF 2024
CM APPL. No. 57296 OF 2024
MAY  6, 2025
Vivek Sarin, Adv. for the Petitioner. Anurag Ojha, Gibran Naushad, SSCs, Subham Kumar, Dipak Raj, Harsh Singhal and Suraj Shekhar Singh, 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- M/s. Jinender Paper Mart through Its Proprietor under Articles 226 & 227 of the Constitution of India challenging order dated 27th August, 2024 passed by the Sales Tax Officer Class II/AVATO Jurisdiction, Ward 12, Zone 2, Delhi (hereinafter, ‘the impugned order’) which arises from Show Cause Notice dated 29th May, 2024
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 impugned notifications were under consideration before this Court in a batch of matters with the lead matter 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 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 31-32023 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 oftheActas 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. 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. Union of India [W.P. (C) No. 9214 of 2024, dated 23-4-2025].
7. On facts, the submission of Mr. Vivek Sarin, ld. Counsel for the Petitioner is that the Show Cause Notice dated 29th May, 2024, was not served, and no hearing notice was also issued, as the Petitioner’s GST registration was suspended vide Show Cause Notice dated 24th July, 2023. It is his case that the Petitioner lacked any knowledge about the Show Cause Notice dated 29th May, 2024 as he did not have access to the portal at the relevant point of time. This position is disputed by the Counsel for the Respondents.
8. The Court has perused the records. The Show Cause Notice dated 24th July, 2023 reads as under:
“Whereas on the basis of information which has come to my notice, it appears that your registration is liable to be cancelled for the following reasons:
Rule 21(b)- person issues invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made thereunder You are hereby directed to furnish a reply to the notice within seven working days from the date of service of this notice.
If you fail to furnish a reply within the stipulated date or fail to appear for personal hearing on the appointed date and time, the case will be decided ex parte on the basis of available records and on merits.
Please note that your registration stands suspended with effect from 24/07/2023″
9. A perusal of the above Show Cause Notice makes it clear that the Petitioner’s GST Portal remained suspended from 24th July, 2023. It is further noticed that the Petitioner has not filed a reply to the Show Cause Notice dated 29th May, 2024 from which the impugned order arises. The personal hearing, even though granted on 23rd August, 2024, has not been availed by the Petitioner. Considering the above position and the fact that the opportunity to file the reply or attend personal hearings has not been availed of, this Court is of the opinion that the Petitioner ought to be provided another opportunity to be heard on merits.
10. Accordingly, the impugned order is set aside and the matter is relegated to the Adjudicating Authority to be heard on merits. The Petitioner is permitted to file a reply by 10th July, 2025. Upon such reply being filed, the Adjudicating Authority shall provide a personal hearing to the Petitioner, and the notice for the same shall be sent to the following email address and Phone number:
Email: kaushik.satish77@gmail.com
Phone number: 9013407227
11. 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 access to the notices and related documents.
12. It is again made clear that the issue in respect of the validity of the impugned notifications is left open and the order of 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] and this Court in Engineers India Ltd. (supra).
13. The petition is disposed of in the above terms. Pending applications, if any, are also disposed of.