Facts of the Case

The Petitioner, Power2SME Pvt. Ltd., challenged:

  • Order-in-Original dated 16.08.2024 passed under Section 73 of the CGST Act, 2017, and
  • Notification No. 56/2023–Central Tax dated 28.12.2023

The case formed part of a larger batch of matters challenging the validity of GST notifications relating to extension of limitation under Section 168A of the CGST Act.

On facts:

  • A Show Cause Notice (SCN) dated 31.05.2024 was issued for FY 2019–2020
  • Petitioner filed reply on 01.07.2024
  • A personal hearing notice was issued but could not be attended
  • Petitioner sought adjournment, but no fresh hearing opportunity was granted
  • The adjudicating authority passed the order ex parte, raising tax demand and penalties

Further, the Petitioner contended that the impugned order travelled beyond the SCN grounds 

Issues Involved

  1. Whether passing an adjudication order without granting effective personal hearing violates principles of natural justice
  2. Whether an adjudication order can go beyond the scope of the Show Cause Notice
  3. Validity of Notification No. 56/2023-Central Tax under Section 168A CGST Act
  4. Whether adjudication proceedings are sustainable when the issue of limitation extension is pending before the Supreme Court 

Petitioner’s Arguments

  • No effective opportunity of personal hearing was granted
  • Request for adjournment was ignored
  • Order passed ex parte, causing prejudice
  • Adjudication order contains findings beyond SCN allegations
  • Personal hearing is crucial for fair adjudication under GST
  • Challenge to Notification No. 56/2023 on grounds of lack of proper GST Council recommendation 

Respondent’s Arguments

  • Opportunity of hearing was provided
  • Petitioner failed to avail the same
  • Reply was considered on merits
  • Non-production of documents justified denial of ITC
  • Notification issued under valid statutory authority 

Court’s Findings / Order

The Delhi High Court held:

  • The impugned order was passed without adequate opportunity of hearing
  • Principles of natural justice were violated
  • Petitioner must be given a fair chance to present its case

Directions:

  • Impugned Order set aside
  • Petitioner allowed to file supplementary reply within 30 days
  • Adjudicating Authority to:
    • Issue fresh personal hearing notice
    • Consider reply and submissions
    • Pass a fresh order on merits

Important Clarification

  • The Court did not decide the validity of Notification No. 56/2023
  • The issue is pending before the Supreme Court in:

M/s HCC-SEW-MEIL-AAG JV vs Assistant Commissioner of State Tax & Ors. (SLP No. 4240/2025)

  • Any adjudication will be subject to the Supreme Court’s final decision

Sections Involved

  • Section 73 – CGST Act, 2017 (Determination of tax not paid/short paid)
  • Section 168A – CGST Act, 2017 (Power to extend time limits)
  • Section 16(2)(c) – CGST Act, 2017 (Conditions for ITC eligibility)

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/PMS23042025CW171672024_193221.pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.