Facts of the Case

The petitioner, M/s Ganga Enterprises, challenged an Order-in-Original dated 28th August, 2024 confirming a demand of ₹97,53,080 along with interest and penalties for the tax period April 2019 to March 2020. The firm is a sole proprietorship owned by Mrs. Chakresh Jain, a widow and senior citizen aged above 75 years, holding a dealership agreement with Hindustan Petroleum Corporation Limited for supply of domestic and commercial LPG.

A notice in Form GST ASMT-10 dated 5th April, 2024 was issued alleging short payment of tax on account of mismatch between GSTR-1 and GSTR-3B returns. A show cause notice dated 29th May, 2024 was thereafter issued under Section 73(1) of the CGST Act. Despite issuance of multiple personal hearing notices, no reply was filed and no appearance was made, resulting in an ex parte adjudication order.

Issues Involved

Whether the ex parte adjudication order confirming GST demand could be sustained when the proprietor was prevented from responding due to serious medical conditions, whether the matter deserved remand in the interest of natural justice, and whether relief could be granted while the validity of Notification Nos. 9 and 56 of 2023 issued under Section 168A of the CGST Act was pending consideration before the Supreme Court.

Petitioner’s Arguments

The petitioner contended that the sole proprietor was suffering from acute kidney-related medical conditions since 2022, which incapacitated her from filing replies or attending personal hearings. It was submitted that the failure to respond was not deliberate and that the matter deserved reconsideration on merits. Reliance was placed on decisions of the Delhi High Court granting relief in similar circumstances where adjudication orders were passed ex parte.

Respondent’s Arguments

The Revenue submitted that the petitioner had been duly served with notices and multiple opportunities of personal hearing were granted. It was contended that the adjudication order was passed in accordance with law and that no reply had been filed despite sufficient opportunities.

Court Order / Findings

The Delhi High Court observed that the petitioner’s failure to respond was attributable to serious medical conditions of the senior citizen proprietor. Following its earlier decision in Sugandha Enterprises v. Commissioner, DGST, the Court held that the matter deserved reconsideration on merits to uphold principles of natural justice. At the same time, the Court noted that repeated opportunities had been granted and therefore imposed costs as a condition for granting relief.

The Court refrained from examining the validity of Notification Nos. 9 and 56 of 2023 issued under Section 168A of the CGST Act, keeping the issue open in view of pending proceedings before the Supreme Court.

Important Clarification

The High Court clarified that the impugned adjudication order was being set aside without examination of the merits of the demand and that all rights and remedies of the parties were left open. It was further clarified that any fresh adjudication would be subject to the outcome of proceedings pending before the Supreme Court concerning the validity of limitation extension notifications.

Final Outcome

The writ petition was allowed subject to payment of costs of ₹1,00,000 to the Delhi High Court Bar Association. The impugned Order-in-Original dated 28th August, 2024 was set aside. The petitioner was permitted to file a reply to the show cause notice by 15th December, 2025, after which a personal hearing was directed to be granted and a fresh reasoned order passed in accordance with law.

SOURCE LINK: https://delhihighcourt.nic.in/app/showFileJudgment/75418112025CW167412025_180005.pdf

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