Writ petition against GST demand order is dismissed as an appeal is pending and the reply was considered.

I. Writ petition against GST demand order is dismissed as an appeal is pending and the reply was considered.

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

I. GST Demand Order Not Subject to Writ Intervention When Appeal is Pending and Reply Was Considered.

Issue:

Whether a writ petition challenging a GST demand order should be entertained when the assessee’s reply to the show cause notice (SCN) was duly considered by the Adjudicating Authority, and an appeal against the impugned order has already been filed by the assessee.

Facts:

• An impugned demand order was passed against the assessee after the issuance of a show cause notice (SCN).
• The assessee challenged this order via a writ petition.
• The court found that the assessee had, in fact, filed a reply to the SCN, and this reply was “duly considered” by the Adjudicating Authority.
• Furthermore, an appeal had already been filed by the assessee in this matter, challenging the impugned order.

Decision I:

The court held in favor of the revenue. It ruled that since the assessee had filed a reply that was duly considered, and an appeal challenging the impugned order was already pending, the appeal should be considered on its merits by the Appellate Authority. Therefore, the impugned order (the original demand order) was set aside, and the Appellate Authority was directed to pass an order in accordance with law. The writ petition was disposed of.

Key Takeaways I:

• Alternate Remedy and Exhaustion of Remedies: This case strongly reinforces the principle that writ jurisdiction (under Article 226 of the Constitution) is an extraordinary remedy and is generally not exercised when an effective alternate statutory remedy (like an appeal under Section 107 of the CGST Act) is available and, in this case, already availed.
• Due Consideration by Adjudicating Authority: The court’s finding that the reply was “duly considered” indicates that the Adjudicating Authority applied its mind to the submissions. This negates claims of natural justice violation based on non-consideration.
• Role of Appellate Authority: Once an appeal is filed, the Appellate Authority is the appropriate forum to review the original order on its merits, including both factual and legal aspects.
• Setting Aside the Impugned Order for Appeal: The seemingly contradictory action of “setting aside” the impugned order while ruling “in favour of revenue” needs clarification. In such contexts, “setting aside” often means removing the original order from the High Court’s writ purview to allow the appeal to proceed unhindered on its merits before the designated appellate forum. It’s a procedural step to properly channel the dispute, not a ruling on the merits of the demand by the High Court itself. The revenue “wins” because the writ petition is dismissed, and the assessee is sent to the proper appellate channel.

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 (issued by the Central Board of Indirect Taxes and Customs (CBIC) for extending limitation periods), when the same legal question is already 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.
• The assessee also challenged the corresponding state notifications.
• 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 matter concerning the validity of these notifications was pending consideration before the Supreme Court in S.L.P. No. 4240/2025, dated February 21, 2025.

Decision II:

The court held 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 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, particularly under Section 168A, 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.