Full Text
HIGH COURT OF DELHI
Date of Decision: 27th May, 2025
M V METALS THROUGH ITS PROPRIETOR MR RAHUL JAIN
2019 20 .....Petitioner
Through: Mr. Parveen Gambhir, Mr. Rakesh Kumar and Mr. Akul Mangla, Advocates.
Through: Mr. Sumit K. Batra, Advocate for GNCTD.
Ms. Anushree Narain, SSC
Mr. Hemant Kumar Yadav, SPC for UOI/R-3.
Prathiba M. Singh, J. (Oral)
JUDGMENT
1. This hearing has been done through hybrid mode. CM APPL. 27571/2025 (for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of. W.P.(C) 6029/2025 & CM APPL. 27572/2025 (for interim relief)
3. The present petition has been filed by the Petitioner- M.V. Metals under Article 226 of the Constitution of India, inter alia, assailing the Show Cause Notice dated 16th May, 2024 (hereinafter, ‘the SCN’) for the tax period April 2019 to March 2020, as also the consequent order dated 30th August, 2024 passed by the office of Sales Tax Officer Class II/ AVATO, Delhi (hereinafter, ‘the impugned order’).
4. The petition also challenges the vires of Notification Nos. 9/2023- Central Tax dated 31st March 2023, 56/2023- Central Tax dated 28th December, 2023 as also the 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 notifications and accordingly, the following order was passed:
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:
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.”
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 in S.L.P. NO. 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.
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 a reply dated 15th June, 2024 along with supporting documents was filed by the Petitioner pursuant to the SCN dated 16th May, 2024. In the SCN, a demand of Rs.6,25,534/- was raised upon the Petitioner.
9. Ld. Counsel for the Petitioner submits that a personal hearing was afforded to the Petitioner and its Authorized Representative had appeared before the Adjudicating Authority. It is the case of the Petitioner that the impugned order has been passed in haste without duly considering the reply as well as the documents filed by the Petitioner and has mechanically confirmed the demand of the remaining amount. Hence, the impugned order deserves to be set aside.
10. Heard. This Court has considered the submissions made and has perused the impugned order. In the opinion of this Court, the impugned order has been passed after duly considering the reply of the Petitioner. Relevant portion of the impugned order is extracted herein below: “Observations and conclusion of the assessing authority: Not Agreed with Tax Payer Specific reasons entered THE REPLY FURNISHED BY THE TAXPAYER IS NOT SATISFACTORY BECAUSE HE DID NOT SUBMIT ANY SUPPORTING DOCUMENTS LIKE E-WAY BILL, INVOICES, BANK STATEMENTS, PURCHASE REGISTER ETC.
HENCE DEMAND IS CREATED.”
11. Upon considering the impugned order, 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.
12. Accordingly, the Petitioner is granted time till 15th July, 2025, to file an appeal before the appellate authority under Section 107 of the Central Goods and Service Tax Act, 2017.
13. If the appeal is filed by the Petitioner before 15th 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.
14. 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.
15. However, it is also made clear that the issue in respect of the validity of the impugned notifications 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 M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. and this Court in W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India &Ors.
16. The appearance of Mr. Hemant Kumar Yadav, ld. SPC appearing for Union Of India/Respondent No.3 is taken on record for today as also for previous order i.e. 7th May 2025.
17. Petition is disposed of in these terms. All pending applications, if any, are also disposed of.
PRATHIBA M. SINGH JUDGE RAJNEESH KUMAR GUPTA JUDGE MAY 27, 2025/nd/ck