Full Text
HIGH COURT OF DELHI
Date of Decision: 7th May, 2025
R L ENTERPRISES .....Petitioner
Through: Mr. Ruchir Bhatia & Mr. Abhishek, Advocates.
Through: Ms. Vaishali Gupta, Advocate.
Prathiba M. Singh, J. (Oral)
JUDGMENT
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner- R.L. Enterprises under Article 226 and 227 of the Constitution of India inter alia, challenging the Show Cause Notice dated 2nd December, 2023 (hereinafter ‘impugned SCN’) and order dated 30th April, 2024 (hereinafter ‘impugned order’). Additionally, the petition also challenges the vires of Notification NO. 56/2023-Central Tax dated 28th December, 2023, issued by the Central Board of Indirect Taxes and Customs (hereinafter ‘impugned notification’).
3. Today, at the outset, ld. Counsel for the Petitioner, on instructions, submits that he does not wish to press for prayer (b) and (d) which read as under: “b) Issue a writ of declaration or any other writ, order or direction in the nature thereof declaring Section 16(2)( c) of the CGST Act, 2017 /DGST Act, 20 I 7 as ultra vires to the Constitution of India, 1950; ***********
(d) Issue an appropriate writ, order or direction to declare the orders dated 09.08.2024, 16.11.2023, 07.11.2023, 16.10.2023 and 29.09.2023 issued by the Department of Trade and Taxes, Government of National Capital Territory of Delhi, as ultra vires being beyond the provisions of the parent Act. i.e., Delhi Goods and Service Tax Act, 2017.”
4. The impugned notification was under consideration before this Court in a batch of matters with the lead matter being W.P.(C) 16499/2023 titled ‘DJST Traders Pvt. Ltd. vs. Union of India and Ors.’. On 22rd April, 2025, the parties were heard at length qua the validity of the impugned notifications and accordingly, the following order was passed:
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:
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:
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.
6. On facts, the submission of the Petitioner is that the impugned SCN dated 2nd December, 2023 is completely non-speaking and vague in nature. It is submitted that the impugned SCN does not present any independent investigation and is merely an auto-generated summary of alleged discrepancies in the returns of the Petitioner. This, according to the Petitioner, is in violation of the Principles of Natural Justice and renders the impugned SCN liable to be set aside.
7. Heard. The Court has perused the records. It is noticed that no reply to the impugned SCN dated 2nd December, 2023 has been filed despite further time being granted on 30th December, 2023. On a query raised to the ld. Counsel for the Petitioner regarding the same, it is conceded that there was a lapse on its part in not filing the replies and further submits that the reason for the demand is that the registration of the dealers has been cancelled. However, it is prayed that the Petitioner wishes to defend the matter on merits.
8. Considering the above circumstances, and the fact that the challenge to the impugned notification is pending before the Supreme Court, the impugned order is set aside and the matter is relegated back to the Adjudicating Authority for the Petitioner to be provided another opportunity to present its case on merits subject to payment of Rs. 20,000/- to be paid to Delhi High Court Bar Association in the following account. Name: Delhi High Court Bar Association A/c No: 15530100000478 IFSC Code: UCBA0001553 Bank & Branch: UCO Bank, Delhi High Court
9. The Petitioner is allowed to file a reply by 10th July, 2025. Upon filing of the reply and proof of payment of costs, the Adjudicating Authority shall grant the Petitioner a personal hearing. and the notice for the same shall be issued to the Petitioner at the following Email ID and Phone number: Email ID: Bhatiaruchir@gmail.com Phone number: 9810371417
10. Thereafter, let the comprehensive adjudication order be passed by the Adjudicating Authority on merits upon considering the reply and submissions of the Petitioner.
11. All the rights and remedies of the parties are left open. Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable access to the notices and related documents.
12. However, it is again made clear that the issue in respect of the validity of the impugned notifications is left open and the order of the Adjudicating Authority shall be subject to the outcome of the decision of 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’.
13. The petition is disposed of in the above terms. Pending applications if any, are also disposed of.