Full Text
HIGH COURT OF DELHI
Date of Decision: 26th May, 2025
EFFECTS MANAGEMENT SERVICES PRIVATE LIMITED .....Petitioner
Through: Mr. Pulkit Verma, Advocate
Through: Mr. Gaurav Sharma & Mr. Sachin Singh, Advocates for R-1/UOI. Ms. Nancy Jain, Sr. Standing Counsel for
CBIC. Mr. KG Gopalakrishnan & Ms. Nisha Mohandas, Advocates.
Prathiba M. Singh, J. (Oral)
JUDGMENT
1. This hearing has been done through hybrid mode.
2. The present petition has been filed under Articles 226 & 227 of the Constitution of India, inter alia, challenging the impugned order dated 16th August, 2024, passed by the Respondent No. 1 - Sales Tax Officer Class II/AVATO, Delhi (hereinafter, “the impugned order”). The impugned order arises from the Show Cause Notice dated 23rd May, 2024 (hereinafter “the SCN”).
3. The petition also challenges the vires of Notification No. 56/2023- Central Tax dated 28th December, 2023 as also Notification No. 56/2023- State Tax dated 11th July, 2024 (hereinafter ‘impugned notifications’).
4. 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:
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. 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 in S.L.P. NO. 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.
6. 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.
7. In the present case, the submission of the Petitioner, on facts, is that the SCN was uploaded on the ‘Additional Notices Tab’. Therefore, the same was not brought to the knowledge of the Petitioner due to which no reply was filed. Thereafter, a reminder notice was also issued to the Petitioner on 23rd July, 2024, directing the Petitioner to file the reply and avail the opportunity of a personal hearing. However, the said reminder letter is stated to not be accessible to the Petitioner at the relevant time. It is the case of the Petitioner that the impugned order was passed without providing the Petitioner with an opportunity to challenge the case on merits.
8. The Petitioner has also challenged the impugned order on the ground that the same is a non-speaking order.
9. The Court has heard the parties and perused the impugned order. The operative portion of the reads as under: “Observations and conclusion of the assessing authority: Agreed with SCN amount Specific reasons entered No reply/explanation has been received from the taxpayer despite sufficient and repeated opportunities, Neither taxpayer nor his AR appeared for personal hearing, which indicate that the taxpayer had nothing to say in the matter and left no option except creating of the demand.”
10. In the opinion of this Court, the impugned order appears to be unreasoned and non-speaking in nature. Additionally, no opportunity for personal hearing has also not been availed by the Petitioner. Moreover, it would also be relevant to consider the aspect of uploading of the SCN on the ‘additional notices tab’. In fact, this Court in W.P.(C) 13727/2024 titled ‘Neelgiri Machinery through its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others’, under similar circumstances where the SCN was uploaded on the ‘Additional Notices Tab’ had remanded the matter in the following terms:
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 23rd April, 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 emailed 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.”
11. There is no doubt that after 16th January 2024, changes have been made to the GST portal and the ‘Additional Notices Tab’ has been made visible. However, in the present case, the impugned order is a non-speaking order and the present petition has been filed also challenging the impugned notifications. Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority.
12. Accordingly, the impugned order is set aside. The Petitioner is granted time till 10th July 2025, to file the reply to 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: pulkit@enurelegal.com Mobile: 9716694879
13. 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 order with respect to the SCN shall be passed accordingly.
14. 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.
15. 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 reply as also access to the notices and related documents.
16. 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 26, 2025/da/msh