Adjudication Order Set Aside as Consultant's Abrupt Exit Prevented Reply; Fresh Hearing Ordered.

Adjudication Order Set Aside as Consultant’s Abrupt Exit Prevented Reply; Fresh Hearing Ordered.

Issue

Whether an ex-parte adjudication order raising a GST demand is sustainable when the petitioner failed to file a reply or appear for a hearing because their tax consultant abruptly disengaged without notice, thereby denying the petitioner a proper opportunity to defend themselves.

Facts

Period: Financial Year 2019-20.
The Default: The petitioner was issued a Show Cause Notice (SCN). However, no reply was filed, and the petitioner did not participate in the proceedings.
Reason for Default: The petitioner explained that they had appointed a consultant to handle GST compliances. This consultant abruptly disengaged from the work without prior intimation, leaving the petitioner unaware of the pending notices.
The Order: Due to the lack of response, the Adjudicating Authority passed an ex-parte order confirming the demand without a personal hearing on merits.
The Plea: The petitioner approached the High Court seeking a chance to submit a reply and be heard on merits.

Decison

The High Court (likely Delhi HC) disposed of the writ petition in favour of the assessee by way of remand.
Denial of Opportunity: The Court acknowledged that since no reply was filed (due to the consultant’s issue), the petitioner effectively had no opportunity to present their case.
Remand: To ensure justice, the Court set aside the impugned order and remanded the matter back to the Adjudicating Authority.
Direction: The Authority was directed to adjudicate the matter afresh after affording the petitioner an opportunity to file a reply and granting a personal hearing.

Key Takeaways

Consultant’s Abrupt Exit: Courts view the sudden abandonment by a professional representative as a valid “sufficient cause” for non-compliance. Taxpayers should not suffer for the unprofessional conduct of their agents.
Right to be Heard: The judgment reinforces that a demand should ideally be confirmed after a contested hearing, not merely by default.

Validity of Notifications Extending Limitation for FY 2019-20 Subject to Supreme Court Verdict.

Issue

Whether the notifications issued by the Central Government (CBIC) and the State Government extending the time limit for passing adjudication orders for FY 2019-20 are legally valid under Section 168A of the CGST Act.

Facts

The Challenge: The petitioner challenged the validity of:
- Notification No. 9/2023-Central Tax (dated 31-03-2023).
- Notification No. 56/2023-Central Tax (dated 28-12-2023).
- Parallel State Notification (dated 11-07-2024).
Context: These notifications extended the limitation period for issuing orders under Section 73 for the financial year 2019-20.

Decision

The High Court disposed of this ground by linking it to pending higher litigation.
Pending Litigation: The Court noted that the validity of the Central Notifications is pending consideration before the Supreme Court, and the State Notification is pending before the High Court.
Conditional Outcome: The Court ruled that the petitioner’s challenge to these notifications in the present proceedings would be subject to the outcome of the final decisions by the Supreme Court and High Court in those pending cases.

Key Takeaways

Limitation Defense Survives: By raising this ground, the petitioner ensures that if the Supreme Court later strikes down the extension notifications, the demand for FY 2019-20 will be quashed as time-barred, even if the petitioner loses on merits in the remand proceedings.
Sub-Judice Nature: The legal validity of the time extensions granted post-COVID (for 2018-19 and 2019-20) remains a significant, unresolved legal question.

HIGH COURT OF DELHI
Sanjay Medicos

Sales Tax Officer/DGST^*

PRATHIBA M. SINGH and SHAIL JAIN, JJ.

W.P.(C)No. 16448 OF 2025
CM APPL. No. 67277 OF 2025

OCTOBER 30, 2025

Akshay Allagh, Adv. for the Petitioner. Ms. Vaishali Gupta, Panel Counsel (Civil) for the Respondent.

ORDER

Prathiba M. Singh, J. – This hearing has been done through hybrid mode.

2. The Petitioner- M/s Sanjay Medicos has filed the present petition under Articles 226 of the Constitution of India, inter alia, seeking the quashing of the impugned order dated 9^th August, 2024 for the Financial Year 2019-20 passed by the Sales Tax Officer Class II/Avato Ward 90, Zone-8, Delhi. The present petition also challenges the impugned Show Cause Notice dated 23^rd May, 2024 issued by Sales Tax Officer Class II/Avato Ward 90, Zone-8, Delhi(hereinafter ‘impugned SCNs’).

3. Additionally, the present petition also challenges the vires of the following notifications:

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Notification No.09/2023-Central Tax dated 31^st March, 2023;

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Notification No.09/2023-State Tax dated 22^nd June, 2023;

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Notification No. 56/2023- Central Tax dated 28th December, 2023; and

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Notification No. 56/2023- State Tax dated 11th July, 2024(hereinafter, ‘the impugned notifications’).

4. The challenge in the present petitions is similar to a batch of petitions wherein inter alia, the impugned notifications were challenged. W.P.(C) No. 16499/2023 titled DJST Traders Private Limited v. Union of India [2025] 174 taxmann.com 191 (Delhi) was the lead matter in the said batch of petitions. On 22^nd 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 inHCC-SEW-Meil-AAG JV v. Assistant Commissioner of State Tax [2025] 174 taxmann.com 1080 (SC)/HCC-SEW-Meil-AAG JV v. Assistant Commissioner of State Tax [2025] 174 taxmann.com 1080 (SC)/ 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 57-2022 & 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 20192020 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 7-3-2025.”

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. The abovementioned writ petition and various other writ petitions have been disposed of by this Court on subsequent dates, either remanding the matters or relegating the parties to avail of their appellate remedies, depending upon the factual situation in the respective cases. All such orders are subject to further orders of the Supreme Court in respect of the validity of the impugned notifications in HCC-SEW-Meil-AAG JV v. Assistant Commissioner of State Tax [2025] 174 taxmann.com 1080 (SC)/ S.L.P No 4240/2025.

6. However, in cases where the challenge is to the parallel State Notifications, the same have been retained for consideration by this Court. The lead matter in the said batch is Engineers India Limited v. Union of India [W.P.(C) No. 9214 of 2024, dated 23-4-2025]

7. On facts, the impugned order raises the following demands qua the Petitioner:

8. The only reason given by the Petitioner for not filing any reply to the SCN is that the Petitioner has appointed a consultant to deal with the matter, who was handling the Petitioner’s GST compliances, however, he had abruptly disengaged himself from the said work without any prior intimation. Consequently the SCN escaped the attention of the Petitioner and he did not take action within the prescribed period. A reminder was also issued to the Petitioner on 1^st July, 2024.

9. The Court has heard the parties. In fact, this Court in W.P.(C) 4779/2025 titled ‘Sugandha Enterprises v. Commissioner of DGST [2025] 179 taxmann.com 399 (Delhi), under similar circumstances where no reply was filed to the SCN had remanded the matter in the following terms:

“6. On facts, however, the submission of the Petitioner in the present petition is that the Petitioner was not afforded with an opportunity to file a reply to the SCN dated 23rd May, 2024 and the impugned order was passed without affording the Petitioner with an opportunity to be heard. Hence, the impugned order is a non-speaking order and is liable to be set aside on the said ground.

7. Heard. The Court has considered the submissions made. The Court has perused the records. In this petition, as mentioned above, no reply to the SCN has been filed by the Petitioner. Relevant portion of the impugned order reads as under:

And whereas, the taxpayer had neither deposited the proposed demand nor filed their objections/ reply in DRC-06 within the stipulated period of time, therefore, following the Principle of Natural Justice, the taxpayer was granted opportunities of personal hearing for submission of their reply/objections against the proposed demand before passing any adverse order.

And whereas, neither the taxpayer filed objections/reply in DRC 06 nor appeared for personal hearing despite giving sufficient opportunities, therefore, the undersigned is left with no other option but to upheld the demand raised in SCN/DRC 01. DRC 07 is issued accordingly.

8. This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCN and the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner to contest the matter on merits.

9. Accordingly, the impugned order is set aside. The Petitioner is granted 30 days’ time to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing. The personal hearing notice shall personal hearing. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:.”

10. Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority.

11. Accordingly, the impugned order is set aside. The Petitioner is granted time till 30^th November, 2025, to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:

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Mobile No.: 9999462412

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E-mail Address: advocatemayankg@gmail.com

12. The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly. The said leave is granted subject to payment of Rs.20,000/- to be paid to the Department.

13. 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 Adjudicating Authority shall be subject to the outcome of the decision of the Supreme Court inHCC-SEW-Meil-AAG JV (supra)and this Court in Engineers India Limited (supra).

14. The petitions are disposed of in these terms. All pending applications, if any, are also disposed of.