Facts of the Case

The petitioner, M/s Sanjay Medicos, filed a writ petition under Article 226 of the Constitution challenging the order dated 09.08.2024 passed for Financial Year 2019-20 by the Sales Tax Officer, Class-II, Ward-90, Zone-8, Delhi, and the Show Cause Notice dated 23.05.2024. The petitioner also challenged the constitutional validity of Notification No. 09/2023 (Central Tax), Notification No. 09/2023 (State Tax), Notification No. 56/2023 (Central Tax) and Notification No. 56/2023 (State Tax), issued under Section 168A of the CGST Act extending limitation for adjudication.

The impugned order raised substantial demands of tax, interest and penalty for the period April 2019 to March 2020. The petitioner did not file any reply to the show cause notice. The explanation offered was that the GST consultant handling compliances abruptly disengaged without intimation, causing the notice to escape attention despite issuance of a reminder dated 01.07.2024.

Issues Involved

Whether the impugned adjudication order passed without filing of reply and without effective hearing violated principles of natural justice, whether the matter deserved remand for fresh adjudication, and whether the challenge to limitation-extension notifications should be kept open pending adjudication by the Supreme Court.

Petitioner’s Arguments

The petitioner submitted that no effective opportunity of hearing was granted and that the adjudication order was a non-speaking order passed mechanically. It was contended that failure to file reply occurred due to consultant’s disengagement and was neither deliberate nor contumacious. The petitioner sought setting aside of the impugned order and permission to file reply to the show cause notice and contest the matter on merits. The petitioner also pressed challenge to the impugned notifications extending limitation under Section 168A of the CGST Act.

Respondent’s Arguments

The Revenue argued that sufficient opportunities were granted, including issuance of reminder, and that the petitioner failed to respond. It was submitted that the impugned order was passed in accordance with law and that the notifications extending limitation were valid. The Department, however, did not seriously oppose remand if the Court deemed it appropriate, subject to safeguards.

Court Order / Findings

The Delhi High Court noted that similar challenges to the impugned notifications were pending before the Supreme Court in SLP No. 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV vs Assistant Commissioner of State Tax & Ors., and that various High Courts had taken divergent views. The Court observed that numerous writ petitions had been disposed of by remanding matters or relegating parties to appellate remedies, subject to the outcome of the Supreme Court proceedings.

On facts, the Court held that the adjudication order was passed without the petitioner having filed a reply or being effectively heard. Relying on its earlier decision in Sugandha Enterprises vs Commissioner, DGST, the Court held that an opportunity ought to be granted to the petitioner to contest the matter on merits. The Court set aside the impugned order and remanded the matter to the adjudicating authority with directions to permit filing of reply and to grant personal hearing.

The Court imposed cost of ₹20,000 payable to the Department as a condition for remand. It clarified that the issue regarding validity of the impugned notifications was left open and that any fresh order would be subject to the outcome of proceedings pending before the Supreme Court and before the Delhi High Court in connected matters.

Important Clarification

The High Court clarified that remand was being granted solely on the ground of violation of principles of natural justice and non-grant of effective opportunity. The Court expressly left open the question of validity of limitation-extension notifications under Section 168A, to abide by the final decision of the Supreme Court.

Final Outcome

The writ petition was disposed of. The impugned adjudication order dated 09.08.2024 was set aside. The petitioner was granted time till 30.11.2025 to file reply to the show cause notice, with a direction to the adjudicating authority to grant personal hearing and pass a fresh reasoned order. The relief was made subject to payment of ₹20,000 as cost to the Department, and all issues on merits and on validity of notifications were kept open subject to final judicial determination.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/PMS30102025CW164482025_152038.pdf

 

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