Writ petition against GST demand order is dismissed as assessee's reply was incomplete; appeal is the proper remedy.

I. Writ petition against GST demand order is dismissed as assessee’s reply was incomplete; appeal is the proper remedy.

II. Challenge to GST limitation extension notifications is stayed pending Supreme Court’s decision.

I. Writ Petition Against GST Demand Order Dismissed; Assessee Directed to Avail Appellate Remedy Due to Incomplete Reply.

Issue:

Whether a writ petition challenging a GST demand order should be entertained when the assessee claims non-issuance of a personal hearing notice, but the Adjudicating Authority, after receiving a reply, confirmed the demand based on the reply being incomplete and lacking supporting documents, and the order is appealable.

Facts:

For the period 2019-20, an SCN was issued to the assessee, proposing a demand for tax, interest, and penalty.
The assessee filed a reply to the SCN.
However, the assessee contended that no notice for a personal hearing was issued, and the demand order confirmed the liability proposed in the SCN.
Upon considering the demand order, the court noted that the Adjudicating Authority had specifically observed that the reply filed by the assessee was incomplete and no supporting documents were attached.

Decision I:

The court held in favor of the revenue. It concluded that since the Adjudicating Authority had observed that the reply was incomplete and lacked supporting documents, the impugned order did not merit any interference by the High Court in writ jurisdiction. Any challenge was to be taken up by the assessee before the Appellate Authority. The writ petition was disposed of accordingly.

Key Takeaways I:

Duty to File Complete Reply: The assessee has a responsibility to file a complete and comprehensive reply to an SCN, supported by relevant documents. An incomplete reply can justify the Adjudicating Authority in proceeding without a further personal hearing if the reply itself does not provide sufficient grounds to alter the proposed demand.
Adjudicating Authority’s Discretion on Personal Hearing: While a personal hearing is generally a principle of natural justice, its necessity can be debated if the assessee’s written submissions are found to be inadequate or incomplete, making a hearing less impactful without underlying evidence. The Adjudicating Authority’s discretion in granting personal hearings, especially when a reply is received, is typically respected unless there’s a clear abuse or denial of fundamental opportunity.
Writ Jurisdiction vs. Appellate Remedy: This case reinforces the rule that writ jurisdiction is not an alternative to the statutory appeal mechanism. Factual disputes, the adequacy of replies, and the merits of the demand should generally be adjudicated by the appellate authorities (under Section 107 of the CGST/DGST Act).
Reasoned Order (Implicit): Although not explicitly stated as a “reasoned order” here, the observation by the court that the Adjudicating Authority “observed that reply was incomplete and no supporting documents were attached” suggests that the Adjudicating Authority did apply its mind to the reply received, thus fulfilling the requirement of considering the assessee’s submission, albeit finding it insufficient.

II. Challenge to GST Limitation Extension Notifications 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, and Notification No. 56/2023-Central Tax, dated December 28, 2023 (issued by the Central Board of Indirect Taxes and Customs (CBIC) for extending limitation periods under the CGST Act, 2017), when the same legal question is pending consideration before the Supreme Court.

Facts II:

For the period 2019-20, the assessee challenged the validity of two Central Tax Notifications:
- Notification No. 9/2023-Central Tax, dated March 31, 2023.
- Notification No. 56/2023-Central Tax, dated December 28, 2023.
The assessee also challenged the corresponding state notifications (Notification No. 9/2023-State Tax, dated June 22, 2023, and Notification No. 56/2023-State Tax, dated July 11, 2024).
These notifications, issued under Section 168A of the CGST Act, 2017 (Power to issue removal of difficulty orders), extended various limitation periods.
It was brought to the court’s attention that the larger issue of the validity of such notifications extending limitation periods was pending consideration before the Supreme Court in S.L.P. No. 4240/2025, dated February 21, 2025.

Decision II:

The court held that the challenge made by the assessee to the notifications in the present proceedings would be subject to the outcome of the decision of the Supreme Court, as the matter was pending consideration before the apex court. The matter was effectively stayed on this point.

Key Takeaways II:

Judicial Comity: High Courts consistently defer to the Supreme Court on questions of law that are already being litigated before the apex court. This ensures consistency in legal interpretation across the country and avoids conflicting judgments.
Significance of Section 168A Notifications: These notifications have broad implications as they directly impact statutory deadlines for assessments, refunds, and other GST proceedings. Their legal validity is a critical issue.
Stay of Proceedings: The court’s decision to “stay” the challenge means that the High Court will not issue a ruling on the validity of these notifications until the Supreme Court provides its judgment. This is a procedural relief for the assessee, keeping their challenge alive.
Outcome Dependent on Supreme Court: The ultimate fate of the assessee’s challenge to the limitation extensions will be determined by the Supreme Court’s verdict in the referenced S.L.P.

HIGH COURT OF DELHI

Dev Enterprises

Commissioner of DGST

PRATHIBA M. SINGH and Rajneesh Kumar Gupta, JJ.

W.P.(C) No. 16973 OF 2024
CM APPL. No. 71894 OF 2024

MAY 7, 2025

Ujjwal Jain, Adv. for the Petitioner. K.G. Gopalakrishnan, Adv. 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 under Article 226 of the Constitution of India challenging the show cause notice dated 27th May, 2024 (hereinafter, ‘the SCN’) issued by the Department of Trade and Taxes, GNCTD, pertaining to the Financial Year 2019-20, as also the consequent order dated 28th August, 2024 passed by the office of Sales Tax Officer Class II/ AVATO, Delhi (hereinafter, ‘the impugned order’).

3. The petition also challenges the vires of Notification No. 9/2023Central Tax dated 31st March, 2023 and Notification No. 56/2023-Central Tax dated 28th December, 2023 as also the Notification No. 9/2023-State Tax dated 22nd June, 2023 and Notification No. 56/2023-State Tax dated 11th July, 2024 (hereinafter ‘impugned notifications’).

4. The validity of the impugned notifications was under consideration before this Court in a batch of petitions with the lead petition being W.P.(C) 16499/2023 titled DJST Traders (P.) Ltd. v. Union of India (Delhi)’. In the said batch of petitions, on 22nd April, 2025, the parties were heard at length qua the validity of the impugned notification 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 168A 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 ld. 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 in HCC-SEW-MEIL-AAG JV v. Asstt. Commissioner of State Tax [S.L.P No. 4240 of 2025, dated 21-2-2025].

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) 9214 of 2024, dated 23-4-2025]

7. In the present case, the submission of the Petitioner, on facts, is that a SCN dated 27th May, 2024, was issued upon them, proposing to create a demand of tax, interest and penalty of Rs. 43,82,768/-. Thereafter, a reply dated 27th June, 2024 was filed by the Petitioner. However, no notice for personal hearing was issued upon the Petitioner.

8. Subsequently, the impugned order dated 28th August, 2024 was passed, confirming the liability of Rs. 43,82,768/-. upon the Petitioner.

9. Heard. This Court has considered the submissions made and has perused the impugned order. Relevant portion of the impugned order is extracted herein below:

“Response of the tax payer :

The tax payer has ‘Not agreed’ for the following amount in the SCN.

SGST : 63414 CGST : 63414 IGST : 2113310 CESS : 0

The reasons cited by the tax payer for disagreeing/partially disagreeing are:

1. Reasons Mentioned by Tax Payer:

SGST :0 CGST :0 IGST :0 CESS :0

Reason:

Submission: We have made purchase of Rs. 22,40,138 (Inclusive of GST) in FY 2019-20 from the party named Singh Trading Co, Chawla Trader, Perfect Overseas, Satguru Impex, Guru Dev Impex., K S G M Steel Industries, Shri Ganesh Traders, Frontier Electricals. mentioned in the notice, the said credit is available in Table 8A as the supplier has duly filed GSTR-1 in stipulated time. The cancellation must have been done at a later date and we are fully eligible to get credit as per Section 16(2) of CGST Act, 2017.

Observations and conclusion of the assessing authority :

Not Agreed with Tax Payer

Specific reasons entered

The reply of the taxpayer has been examined and found that reply is incomplete/not comprehensive and no supporting documents has been attached. Hence, this demand is created.”

10. Upon considering the impugned order, it is seen that the Adjudicating Authority observed that the reply was incomplete and no supporting documents are attached. Accordingly, this Court is of the opinion that the same does not merit any interference of this Court and a challenge, if any, shall be taken up by the Petitioner before the appellate authority in appeal.

11. Accordingly, the Petitioner is granted time till 10th July, 2025, to file an appeal before the appellate authority under Section 107 of the Central Goods and Service Tax Act, 2017.

12. If the appeal is filed by the Petitioner before 10th July, 2025, along with the mandatory pre-deposit, the same shall be adjudicated upon merits and shall not be dismissed on the ground of limitation.

13. It is also made clear that the observations made by this Court in the present petition shall have no bearing upon the decision of the appellate authority.

14. However, it is made clear that the issue in respect of the validity of the impugned notification is left open. Any order passed by the appellate authority shall be subject to the outcome of the decision of the Supreme Court in S.L.P No 4240/2025 titled HCC-SEW-MEIL-AAG JV (supra) and of this Court in W.P.(C) 9214/2024 titled Engineers India Limited (supra)

15. The present petition is disposed of in said terms. Pending applications, if any, stand disposed of.