Full Text
HIGH COURT OF DELHI
Date of Decision: 6th May, 2025
M/S HINDUSTAN CONSTRUCTION COMPANY LTD. .....Petitioner
Through: Mr. Bharat Raichandani, Advocate.
Through: Mr. Ashish Goyal, Senior Panel Counsel for R-1.
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– M/s Hindustan Construction Company Ltd. under Article 226 of the Constitution of India challenging the order dated 31st 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. 56/2023- Central Tax dated 28th December, 2023 (hereinafter ‘impugned notification’).
4. The validity of the impugned notification was under consideration before this Court in a batch of petitions with the lead petition being W.P.(C) 16499/2023 titled ‘DJST Traders Pvt. Ltd. vs. Union of India and Ors.’. In the said batch of petitions, 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:
& 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. 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:
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 notification 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 notification therein shall be subject to the outcome of the proceedings before 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.
6. In the present case, the submission of the ld.counsel for the Petitioner, on facts, is that a show cause notice dated 29th May, 2024 pertaining to the financial year 2019-2020 was issued to the Petitioner and thereafter, the impugned order was passed, raising a demand of Rs. 4,00,47,768/-. The said demand has been raised on various grounds.
7. It is the case of the Petitioner that a detailed reply dated 25th July, 2024, was filed by the Petitioner to the show cause notice dated 29th May, 2024. Subsequently, a personal hearing notice was issued to the Petitioner and the same was also attended on 30th August, 2024. On the same date, an additional reply was also submitted on behalf of the Petitioner and consequently, on 31st August, 2024, the impugned order was passed.
8. The contention of the Petitioner herein is that the reply filed on their behalf on various occasions, in addition to the submissions made by them during the personal hearing have not been considered properly while passing the impugned order.
9. Heard. The Court has considered the submissions made. Considering the stand in the reply dated 25th July, 2024 filed by the Petitioner, it is evident the Input Tax Credit (ITC) in respect of various dealers have been reversed by the Petitioner itself. The relevant paragraph of the reply dated 25th July, 2024, is reproduced herein below: “5.1. The Noticee has rightfully availed the ITC in accordance with Section 16 of the Act. However, as a precautionary measure, the Noticee has reversed the ITC amounting to Rs. 31,38,984/-(CGST Rs. 15,69,492/- & SGST Rs.15,69,492/-) due to ITC mismatch, ITC pertaining to cancelled dealers, and suppliers who have filed their GST returns declaring ‘NIL’ turnover as shown in Table 6H[1] of GSTR-9. This reversal has not been considered by the Notice when calculating the difference in ITC availed as per GSTR-3B vis-a-vis ITC available in 8A of GSTR-9. The reversal of Rs. 31,38,984/- (CGST Rs. 15,69,492/- & SGST Rs.15,69,492/-) includes an excess payment made by the Noticee amounting to Rs. 12,67,122/- (CGST Rs. 6,33,562/- & SGST Rs.6,33,562/-) while filing the GSTR-3B for the relevant tax period and Rs. 18,71,860 /-(CGST Rs.9,35,930/- & SGST Rs.9,35,930/-) paid via DRC-03 dated 19.03.2021. This excess payment of Rs. 12,67,122/- and its reversal was also shown in Table 7H of the GSTR – 9 for the FY 2019-20. The copy of GSTR – 9 for the FY 2019-20 is attached in Annexure -5. The working of this was already explained in earlier paragraph and details were shown in Table No. 2 above. Additionally, a copy of DRC 03 dated 19.03.2021 is also enclosed as Annexure 8 for your reference and records.”
10. In the opinion of this Court, in this case, the Petitioner ought to be permitted to pray for rectification of the impugned order before the adjudicating authority so that the above stand of the Petitioner in the reply can be properly considered by the adjudicating authority.
11. Accordingly, let the Petitioner approach the adjudicating authority under Section 161 of the Central Goods and Service Tax Act, 2017, by 10th July 2025. If the rectification application is filed within the stipulated date, the same shall be adjudicated on merits and shall not be dismissed on the ground of limitation. The reply filed by the Petitioner to the SCN on various occasions as also the submissions made by the Petitioner in the personal hearing shall be considered on merits and if there are any demands to be dropped, the same shall be considered by the adjudicating authority.
12. 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 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. All rights and remedies of the parties are left open. Access to the GST Portal, shall be provided to the Petitioner to enable uploading of the rectification application, if any, as also access to the notices and related documents, if any.
14. The present writ petition is disposed of in above terms. All the pending applications, if any, are also disposed of.
PRATHIBA M. SINGH JUDGE RAJNEESH KUMAR GUPTA JUDGE MAY 6, 2025/MR/ss (corrected and released on 13th May, 2025)