GST demand order is not subject to writ interference if the assessee was granted a personal hearing opportunity but failed to avail it; appeal is the proper remedy.

By | June 1, 2025
0 Comment

I. GST demand order is not subject to writ interference if the assessee was granted a personal hearing opportunity but failed to avail it; 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 if the assessee claims violation of natural justice (e.g., non-consideration of reply), but the records show that the assessee did file a reply and was granted an opportunity for personal hearing, which they failed to attend, especially when 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 challenged this order via a writ petition.
  • The assessee’s claim was that the order suffered from legal infirmities, implicitly including the non-consideration of their reply and lack of proper personal hearing.
  • However, upon perusal of the records, the court found that:
    1. The assessee had, in fact, filed a reply to the SCN.
    2. The assessee was also granted an opportunity of personal hearing.
    3. Crucially, the assessee did not appear for the personal hearing.

Decision I:

The court held in favor of the revenue. Considering the fact that an opportunity of personal hearing was granted to the assessee, the court ruled that the assessee should file an appeal before the appellate authority. The writ petition was, therefore, disposed of.

Key Takeaways I:

  • “Opportunity Granted” vs. “Opportunity Availed”: The distinction is crucial. If the tax authority provides a proper opportunity for a hearing (e.g., by issuing a notice for personal hearing and allowing time), and the assessee fails to avail that opportunity, they generally cannot later claim a violation of natural justice. The burden is on the assessee to utilize the opportunity provided.
  • Substantial Compliance with Natural Justice: Issuing an SCN, allowing a reply, and scheduling a personal hearing (even if not attended) are strong indicators that the principles of natural justice have been substantially complied with.
  • Alternate Remedy Rule: High Courts strongly adhere to the principle that writ jurisdiction (under Article 226 of the Constitution) should not be exercised when an effective and efficacious alternate statutory remedy (like an appeal under Section 107 of the CGST Act) is available. The appeal mechanism is the appropriate forum to challenge the merits of the demand and any alleged procedural irregularities that could not be remedied at the initial stage.
  • No Interference with Reasoned Order (Implied): The court’s decision to not interfere in writ implies that the demand order, having been passed after considering the available reply (even if incomplete) 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. 9/2023-Central Tax, dated March 31, 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. 9/2023-Central Tax, dated March 31, 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 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 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.
HIGH COURT OF DELHI
Cobblerz Shoes
v.
Principal Commissioner of Delhi Goods and Service Tax
PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.
W.P.(C) No. 17639 of 2024
MAY  7, 2025
Ajay Garg, Deepak Singh, Ms. Pragya Rathi and Ms. Rupanshi, Advs. for the Petitioner. Ms. Monica Benjamin, SSC, Ms. Nancy Jain, Vikrant N. Goyal, Nishu Dagar, Ms. Uma Tarafdar and Sumit Goswami, 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- Cobblerz Shoes under Article 226 of the Constitution of India, inter alia, challenging the Show Cause Notice dated 27th September, 2023 and demand order dated 26th December, 2023. (hereinafter, ‘impugned order’) passed by Respondent No.2 – Sales Tax Officer Class II/AVATO, Ward 206, Delhi.
3. The petition also challenges the vires of Notification No. 09/2023-Central Tax dated 31st March 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 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 7-32025.”

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. “
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 perusal of the record, this Court notes that a reply was filed on 26th October, 2023 by the Petitioner. Moreover, an opportunity of personal hearing was also afforded to the Petitioner. However, the Petitioner did not appear for a personal hearing.
7. Considering the fact that an opportunity for personal hearing was granted to the Petitioner, let the Petitioner file an appeal before the Appellate Authority along with pre-deposit by 10th July, 2025.
8. 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 Appellate 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].
9. Petition is disposed of in these terms. All pending applications are also disposed of.