Krishna Sales Vs Commissioner of Delhi Goods and Service Tax And Other
Date: April 28, 2025
Subject Matter
Procedural Flaw: Taxpayer Unaware of GST Notice Hidden in 'Additional Notices' Tab, Gets Extension
Summary
The case involves a legal challenge from Shri Krishna Sales against a show cause notice issued on September 26, 2023, and a demand order dated December 25, 2023, both from the Sales Tax Officer under the Delhi Goods and Service Tax framework. The petitioner contests the validity of Notification No. 09/2023-Central Tax and discusses issues related to the proper procedure followed prior to the issuance of these notifications, particularly critiquing the application of Section 168A. Different High Courts have upheld or quashed these notifications, demonstrating a divide in judicial interpretation, and emphasizing the necessity for clarity regarding compliance deadlines as outlined in Section 168A. The Supreme Court is currently reviewing the validity of these notifications, particularly focusing on whether the extensions granted were lawful under the said section. The case underscores significant procedural concerns, including whether the petitioner was adequately informed of the show cause notice, which was noted to be uploaded under a less visible category on the GST Portal. As a result, the court has decided that the petitioner should be granted a further opportunity to respond to notices and to present their case, while also ensuring the matter awaits the conclusion of the Supreme Court's pending review. The court has set aside the order dated December 25, 2023, allowing the petitioner to submit their replies to the show cause notices and providing them the chance for a personal hearing as well, thereby affirming the principle of fair hearing in administrative proceedings. Pending applications have also been disposed of in line with these directions, ensuring that the final adjudication is made after hearing the petitioner and is also contingent upon the outcome of the Supreme Court's judgment.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. Allowed, subject to all just exceptions. Application is disposed of.
3. The present petition has been filed by the Petitioner – Shri Krishna Sales under Article 226 of the Constitution of India, inter alia, assailing the Show Cause Notice dated 26thSeptember, 2023 and order dated 25th December, 2023 passed by Respondent No.2- Sales Tax Officer Class II/AVATO, Delhi Goods and Service Tax, Ward-63, Zone 6.
4. A challenge has also been raised to Notification No. 09/2023- Central Tax dated 31st March 2023 (hereinafter, ‘impugned notification’). This Court had heard a batch of petitions wherein inter alia, the impugned notification had been challenged. W.P.(C) No. 16499/2023 titled ‘DJST Traders Private Limited v. Union of India & Ors.’ is the lead matter in the said batch of petitions. In the said petition, on 22nd 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 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 168-A of the GST Act.
6. There are many other issues also arising for consideration in this matter.
7. 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. As observed by this Court in the order dated 22nd April, 2025 as well, since the challenge to the above mentioned notification is presently under consideration before the Supreme Court in L.P No 4240/2025 titled ‘M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.’, the challenge made by the Petitioner to the impugned notification in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court.
6. However, on facts, it is noted that the show cause notice has been issued on 26thSeptember, 2023. The same is stated to have been uploaded on the Additional notices tab and the show cause notice did not come to the knowledge of the Petitioner. A demand order has also been issued against the Petitioner on 25th December, 2023.
7. The Petitioner has now filed a rectification application on 15thFebruary, 2023, which the Department is willing to consider.
8. However, in the opinion of this Court, considering that the rectification application is itself barred by limitation, and the show cause notice was uploaded on the additional notices tab, following the decision in W.P.(C) 13727/2024 titled ‘Neelgiri Machinery Through Its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others’, the order dated 25th December, 2023 is set aside.. The relevant portion of Neelgiri Machinery Through Its Proprietor Mr. Anil Kumar(Supra) reads as under:
“ 3. The case of the Petitioner is that although the SCNs were uploaded on the portal, they were placed under the category of “Additional Notices and Orders,” rendering them not directly visible.
4. Vide order dated 26th November, 2024 the Court had directed the Department to file a status report in this regard. Today, a short status report has been handed across on behalf of Respondent No. 2 as per which, the SCNs and the hearing notices were uploaded under the “Notices” tab. However, Mr. Sharma, ld. Counsel for Respondent no.2 fairly submits that as per the said status report itself, the manner in which the notices will appear on the Department’s side and on the tax payer’s side is different. Para 1 of the status report reads as under :-
“1. It is humbly submitted that the GST Portal works differently on the taxpayers side than the department side. Therefore no information is available in ward or on the officer GST portal id regarding the query raised by the Hon’ble Court. Only information that arose while issuing the SCN-DRC01 (Notice) on the department GST portal was that “Notice or order will be mailed to the Taxpayer and will also be available on his dashboard.”
Copy of the submission received from the department dated 03.1.2025 is attached herewith and marked as Annexure – R/1.”
5. A perusal of the above would show that the Department concedes that the portal works differently from the Department’s side and the tax payer’s side. Insofar as the Petitioner is concerned, the Department was not being able to view them on the Notices tab. The Petitioner, in support of its case, has placed on record the print out from the portal which shows that the same was viewable only on Additional notice and orders Tab and hence, may have been missed by the Petitioner.
6. Be that as it may, the intention is to ensure that the Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default. Since there is no clarity on behalf of the Department, this Court follows the order dated 9thSeptember, 2024 in Satish Chand Mittal (Trade Name National Rubber Products) vs. Sales Tax Officer SGST, Ward 25-Zone 1 (W.P.(C) 12589/2024; DHC) as also order dated 23rd December, 2024 in Anant Wire Industries vs. Sales Tax Officers Class II/Avato, Ward 83 & Anr. (W.P.(C) 17867/2024; DHC) where the Court under similar circumstances remanded back the matter to ensure the Noticee/Petitioners get a fair opportunity to be heard. The relevant portion of the order in Sathish Chand Mittal (Supra) reads as under:
“4. It is the petitioner’s case that he had not received the impugned SCN and, therefore, he had no opportunity to respond to the same. For the same reason, the petitioner claims that he had not appear for a personal hearing before the Adjudicating Authority, which was scheduled on 17.10.2023 and later rescheduled to 30.11.2023 as per the Reminder.
5. The petitioner also states that the impugned SCN, the Reminder and the impugned order are unsigned.
6. Singhvi, the learned counsel appearing for the respondent, on advance notice, fairly states that the principal issue involved in the present case is squarely covered by the decisions of this Court in M/s ACE Cardiopathy Solutions Private Ltd. v. Union of India & Ors.: Neutral Citation No. 2024:DHC:4108-DB as well as in Kamla Vohra v. Sales Tax Officer Class II/ Avato Ward 52 : Neutral Citation No.2024:DHC:5108-DB.
7. He states that possibly, the petitioner did not had the access of the Notices as they were projected on the GST Portal under the tab ‘Additional Notices & Orders’. He submits that the said issue has now been addressed and the ‘Additional Notices & Orders’ tab is placed under the general menu and adjacent to the tab ‘Notices & Orders’.
8. In view of the above, the present petition is allowed and the impugned order is set aside.
9. The respondent is granted another opportunity to reply to the impugned SCN within a period of two weeks from date. The Adjudicating Authority shall consider the same and pass such order, as it deems fit, after affording the petitioner an opportunity to be heard.
10. The present petition is disposed of in the aforesaid terms.
11. All pending applications are also disposed of.”
7. The impugned demand orders dated 23rdApril, 2024 and 5th December, 2023 are accordingly set aside. In response to show cause notices dated 04th December, 2023 and 23th September, 2023, the Petitioner shall file its replies within thirty days. The hearing notices shall now not be merely uploaded on the portal but shall also be e-mailed to the Petitioner and upon the hearing notice being received, the Petitioner would appear before the Department and make its submissions. The show cause notices shall be adjudicated in accordance with law.
8. The petitions are disposed of in the above terms. The pending application(s), if any, also stand disposed of.”
9. Accordingly, the Petitioner is permitted to file a reply to the show cause notice within one month. Personal hearing shall be given to the Petitioner on the following email address :
Email ID : adv.aggarwal.rakesh@gmail.com
10. After hearing the Petitioner, the Adjudicating Authority shall pass the order of adjudication. Needless to add that the adjudication order shall be subject to the outcome of the SLP pending in the Supreme Court, where the impugned notification is challenged.
11. The Portal shall be opened within 1 week to enable the Petitioner to file a reply within thirty days from today.
12. The present petition is disposed of in these terms. Pending application(s), if any, shall also stand disposed of.