Writ petition against GST demand order is dismissed as assessee failed to avail personal hearing opportunity;

I. Writ petition against GST demand order is dismissed as assessee failed to avail personal hearing opportunity; appeal is the proper remedy.

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

I. GST Demand Order Not Subject to Writ Intervention When Personal Hearing Opportunity Was Granted But Not Availed.

Issue:

Whether a writ petition challenging a GST demand order should be entertained when the assessee, after filing a reply to a show cause notice, was offered a personal hearing but failed to appear, and an alternate statutory remedy of appeal is available.

Facts:

• An impugned demand order was passed against the assessee subsequent to the issuance of a show cause notice (SCN).
• The assessee filed a reply to the SCN.
• An option for personal appearance (hearing) was also provided to the assessee.
• However, the assessee did not appear for the personal hearing.
• The assessee then challenged the demand order via a writ petition.

Decision I:

The court held in favor of the revenue. It found that since an opportunity for personal hearing was granted to the assessee, which the assessee did not avail, the assessee should be permitted to file an appeal before the appellate authority. The writ petition was, therefore, disposed of.

Key Takeaways I:

• “Opportunity Granted” vs. “Opportunity Availed”: The court emphasized that a proper opportunity for personal hearing was indeed provided by the tax authority. The assessee’s failure to utilize this opportunity, despite having filed a reply, weighs against them.
• Substantial Compliance with Natural Justice: Issuing an SCN, allowing a reply, and scheduling a personal hearing collectively demonstrate that the principles of natural justice were substantially complied with by the department.
• Alternate Remedy Rule: High Courts consistently maintain that their writ jurisdiction (under Article 226 of the Constitution) is extraordinary and should not be invoked as a substitute for an efficacious alternate statutory remedy. The appeal mechanism under Section 107 of the CGST Act is the appropriate forum for challenging such orders on their merits and any alleged procedural irregularities that could have been addressed at the first instance.
• No Interference with Reasoned Order (Implied): The court’s decision to not interfere in writ jurisdiction suggests that the demand order, having been passed after considering the available reply and providing a hearing opportunity, was not so fundamentally flawed as to warrant extraordinary writ intervention.

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 or 74 of 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, issued by the Central Board of Indirect Taxes and Customs (CBIC).
• This notification, issued under Section 168A of the CGST Act, 2017, extended the time limit for passing orders under Section 73(9) (for non-fraud cases) and/or Section 74 (for fraud cases) of the CGST Act.
• 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 S.L.P. No. 4240/2025, 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 Propriety and Comity: High Courts consistently defer to the Supreme Court on questions of law that are already under its consideration. This practice ensures uniformity in legal interpretation and efficient use of judicial resources.
• Significance of Limitation Extensions (Section 168A): Notifications extending limitation periods, particularly under Section 168A (which allows extensions in “special circumstances” like force majeure), 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.