Full Text
HIGH COURT OF DELHI
Date of Decision: 6th August 2025
KBS INDUSTRIES LIMITED (EARLIER KNOWN AS KBS INDUSTRIES LIMITED) .....Petitioner
Through: Ms. Kavita Jha, Sr. Adv.
ORS. .....Respondents
Through: Mr. Akash Panwar, Standing Council (JR)
(99102 96585)
Ms. Urvi Mohan, Adv.
JUDGMENT
1. This hearing has been done through hybrid mode. CM APPL. 48044/2025
2. Allowed, subject to all just exceptions. The application is disposed of. W.P.(C) 11745/2025 & CM APPL. 48043/2025
3. The present petition has been filed by the Petitioner- M/s KBS Industries Limited through its Authorized Signatory under Articles 226 and 227 of the Constitution of India inter alia challenging the Show Cause Notice dated 23rd May 2024 and order dated 11th August 2024 passed by the office of Sales Tax Officer Class II/ AVATO, Delhi, in respect of FY 2019-20.
4. Additionally, the petition also challenges the vires of Notification No.09/2023-Central Tax dated 31st March 2023, Notification No.56/2023- Central Tax dated 28th December, 2023 and Notification No. 56/2023-State Tax dated 11th July, 2024 (hereinafter ‘impugned notifications’).
5. 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 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 notification and accordingly, the following order was passed:
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:
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.”
6. 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.
7. 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 W.P.(C) 9214/2024 titled ‘Engineers India Limited v. Union of India & Ors’.
8. In the present case, the submission of the Petitioner, on facts is that the impugned order is a non-speaking order which does not provide any reasoning to affirm the demand that has been imposed. Ms. Kavita Jha, ld. Sr. Counsel for the Petitioner also points out that the Petitioner did not file its reply and the personal hearing was not availed of. Upon querying, it is informed that the Chartered Accountant had failed to inform the Petitioner regarding the said SCN. However, it is noticed that reminder was issued on 13th July 2024.
9. Ms. Jha further submitted that the Petitioner filed a rectification application on 9th November 2024 demonstrating that a sum of approximately ₹2.15 crore already stood deposited in the electronic cash ledger. The said rectification application was rejected on 20th March 2025 and no credit or consideration has been extended in the impugned order. She submits that despite this fact being brought to the notice of the Adjudicating Authority in the application for rectification, no steps have been taken to rectify the error. Further, no hearing was also granted in the rectification application.
10. Under such circumstances, despite the fact that a reminder notice was issued, considering the fact that the impugned notifications are under challenge before the Supreme Court and the fact that the Petitioner did not get a proper opportunity to be heard on merits or file a reply to the respective SCNs, the Court is of the opinion that 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 30th September 2025, to file a reply to the SCN. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address: ● Email ID: shammi@vaishlaw.com ● Mobile: 9810148827
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 orders with respect to both the SCNs shall be passed accordingly.
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 in S.L.P No 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. and of this Court in W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India &Ors.
14. All rights and remedies of the parties are left open. Access to the GST Portal, if not already available, shall be provided within one week, to the Petitioner to enable uploading of the reply as also access to the notices and related documents.
15. The present writ petition is disposed of in above terms. All the pending applications, if any, are also disposed of.
PRATHIBA M. SINGH JUDGE SHAIL JAIN JUDGE AUGUST 6, 2025 kk/Ar.