GST Demand Order Set Aside and Remanded for Fresh Adjudication Due to Lack of Opportunity

By | June 3, 2025
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I. GST Demand Order Set Aside and Remanded for Fresh Adjudication Due to Lack of Opportunity to File Reply and Be Heard.

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

I. GST Demand Order Set Aside and Remanded for Fresh Adjudication Due to Lack of Opportunity to File Reply and Be Heard.

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 did not file a reply to the show cause notice (SCN), and consequently did not get a proper opportunity to be heard.

Facts:

  • Pursuant to the issuance of a show cause notice (SCN), an impugned order in original was passed against the assessee.
  • The assessee challenged this order via a writ petition.
  • It was noted by the court that the assessee did not file any reply to the SCN.
  • The assessee contended that they did not get a proper opportunity to be heard, leading to no reply being filed.

Decision I:

The court held in favor of the assessee. Considering the fact that the assessee did not get a proper opportunity to be heard and no reply had been filed, the matter deserved to be remanded. Accordingly, the assessee was granted time to file a reply to the SCN, and a fresh order was to be passed after affording an opportunity of hearing to the assessee.

Key Takeaways I:

  • Fundamental Principle of Natural Justice: The judgment strongly reiterates the “audi alteram partem” (hear the other side) principle. Even if a reply is not filed, if the court finds that the assessee genuinely did not receive a proper opportunity to do so, or to be heard, the principles of natural justice are violated.
  • No Reply Filed Does Not Automatically Validate Order: The mere absence of a reply does not automatically validate an order if the assessee can show that the lack of reply or participation was due to a denial of a proper opportunity to present their case.
  • “Proper Opportunity to be Heard”: This signifies more than just issuing a notice. It includes providing adequate time to respond and, typically, a personal hearing.
  • Consequences of Violation: An order passed in violation of these fundamental principles is deemed procedurally invalid and unsustainable.
  • Remedy of Remand: The standard judicial remedy for such procedural violations is to set aside the flawed order and remand the matter back to the original authority for fresh adjudication, ensuring that the assessee is given a proper opportunity to present their case on merits.
  • Section 73: Even for demands not involving fraud, misstatement, or suppression (Section 73), strict adherence to procedural safeguards, including the right to be heard, is mandatory.

II. Challenge to GST Limitation Extension Notification Stayed Pending Supreme Court’s 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 the CGST Act), when the same legal question is already pending consideration before the Supreme Court.

Facts II:

  • The assessee challenged the validity of Notification No. 56/2023-Central Tax, dated December 28, 2023.
  • This notification was issued by the Central Board of Indirect Taxes and Customs (CBIC) and extended various limitation periods.
  • It was brought to the court’s attention that a similar matter 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 similar 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 consistently defer to the Supreme Court on questions of law that are already under its consideration. This ensures uniformity in legal interpretation and efficient use of judicial resources.
  • Significance of Limitation Extensions: Notifications extending limitation periods are crucial for taxpayers 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 ruling. 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
Anju Tuteja
v.
Commissioner of State Goods and Service Tax Delhi
PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.
W.P.(C) No. 6390 of 2025
CM APPL. No. 29189 of 2025
MAY  14, 2025
Ruchir Bhatia, Adv. for the Petitioner. Sumit K. Batra, Adv. for the Respondent.
ORDER
1. This hearing has been done through hybrid mode.
CM APPL. 29189/2025 (for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of.
W.P.(C) 6390/2025
3. The present petition has been filed by the Petitioner under Article 226 and 227 of the Constitution of India, inter alia, assailing the Show Cause Notice dated 29th May, 2024 (hereinafter, ‘SCN’), as also the consequent order dated 10th August, 2024 (hereinafter, ‘impugned order’) passed by Respondent No. 4- Sales Tax Officer Class II/ AVATO, Ward 56, Zone 4, Delhi.
4. The petition also challenges the vires of Notification No. 56/2023-Central Tax dated 28th December, 2023 (hereinafter ‘impugned notification’).
5. The case of the Petitioner is that the SCN is belated and is liable to be quashed, in view of the fact that the impugned notification is ultra vires.
6. The validity of the impugned notification 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 IndiaIn the said batch of petitions, on 22nd April, 2025, the parties were heard at length qua the validity of the impugned notification 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 7-32025.”

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. “
7. Thereafter, on 23rd April, 2025, this Court, having noted that the validity of the impugned notification 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 notification therein shall be subject to the outcome of the proceedings before the Supreme Court in HCC-SEW-MEIL-AAG JV v. Asstt. Commissioner of State Tax [S.L.P No. 4240 of 2025, dated 21-2-2025]
8. However, in the present case, the SCN is dated 29th May, 2024 and no reply has been filed by the Petitioner to the SCN. The same can be seen from a perusal of the impugned order. The relevant portion of the said order reads as under:
“Relevant Annexures with all details was already sent with the Show Cause Notice. However, it is verified that you have not sought any adjournment/ provided any clarification/ compliance till date. Therefore, based on the available facts and records and as per the best judgement, the undersigned hereby decides the following:.”
9. 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 Address: bhatiaruchir@gmail. com
Mobile No.: 9810371417
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 notification is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court in S.L.P No 4240/2025 titled HCC-SEW-MEIL-AAG JV (supra)
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.