R H A ENTERPRISES v. Union of India & Ors.

Delhi High Court · 19 May 2025 · 2025:DHC:4049-DB

Prathiba M. Singh; Rajneesh Kumar Gupta

W.P.(C) 6708/2025

2025:DHC:4049-DB

tax petition_dismissed Significant

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The Delhi High Court dismissed the petition challenging a GST show cause notice and related order, directing the petitioner to file an appeal and leaving the validity of impugned notifications to be decided by the Supreme Court.

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W.P.(C) 6708/2025
HIGH COURT OF DELHI
Date of Decision: 19th May, 2025

W.P.(C) 6708/2025 and CM APPL. Nos. 30417-18/2025
R H A ENTERPRISES .....Petitioner
Through: Mr. Nitin Gulati, Advocate.

VERSUS

UNION OF INDIA & ORS. .....Respondents
Through: Ms. Urvi Mohan, Advocate for GNCTD

CORAM:

JUSTICE PRATHIBA M. SINGH JUSTICE RAJNEESH KUMAR GUPTA
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 under Article 226 of the Constitution of India challenging the show cause notice dated 27th May, 2024 (hereinafter, ‘the SCN’) issued by the Department of Trade & Taxes, Government of N.C.T. of Delhi, pertaining to the Financial Year 2019- 20, as also the consequent order dated 22nd 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 and 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:

“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:

“1. The subject matter of challenge before the High Court was to the legality, validity and propriety of the Notification No.13/2022 dated 5-7-2022 & Notification Nos.9 and 56 of 2023 dated 31-3-2023 & 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:

“65. Almost all the issues, which have been raised before us in these present connected cases and have been noticed hereinabove, are the subject matter of the Hon'ble Supreme Court in the aforesaid SLP. 66. Keeping in view the judicial discipline, we refrain from giving our opinion with respect to the vires of Section 168-A of the Act as well as the 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 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 dated 27th May, 2024, from which the impugned order arises, 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. Hence, the impugned order was passed without providing the Petitioner with an opportunity to challenge the case on merits.

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8. It is further submitted on behalf of the Petitioner that when the impugned order came to the knowledge of the Petitioner, a rectification application dated 19th September, 2024 was filed. However, the same was rejected without giving any hearing to the Petitioner.

9. On the other hand, ld. Counsel for the Respondent-Department submits that the SCN in the present case was issued after 16th January, 2024, when the Department had rectified the portal and ensured that the notices uploaded thereon were made visible. Further, reminders were also issued upon the Petitioner on 23rd July, 2024 and 30th July, 2024. Hence there can be no reason why the Petitioner did not file any reply.

10. The Court has considered the submissions of the parties. Presuming that the SCN did not come to the knowledge of the Petitioner, a perusal of the rectification application filed by the Petitioner shows that the Petitioner gave only a one sentence reasoning in support of the said application which is stated as under: “ ALLEGED MISMATCHES DO NOT EXIST IN OUR BOOKS OF ACCOUNTS”

11. Accordingly, this rectification application was decided on 11th November, 2024 and the same has been rejected. A copy of the application for rectification, as also the order pertaining to the said application is handed over to the Court. Let the same be taken on record.

12. Clearly, even after the Petitioner got knowledge of the impugned order, there was no attempt made by the Petitioner to give a valid justification to the issues raised in the SCN and the subsequent impugned order. A perusal of the screenshot of the Petitioner’s GST Portal would show that all the documents are duly uploaded on the said Portal itself.

13. Having perused the record and all the facts and circumstances, this Court is of the view that if there was some reasoning given in the rectification application dated 18th September, 2024, filed by the Petitioner, the Court may have been inclined to consider the same and remand the matter for fresh adjudication.

14. However, considering the fact that the Respondent-Department has taken all steps in the matter that were required to be taken i.e., issuing of the SCN on the GST Portal, issuing the reminders on the GST Portal, uploading the impugned order on the GST Portal, considering the rectification application filed by the Petitioner, this Court is of the opinion that there is no fault on part of the Respondent-Department. The petitioner ought to have been more careful and diligent in filing a proper reply or application for rectification under these circumstances.

15. Thus, this Court is of the opinion that this petition does not merit any interference of this Court and a challenge, if any, ought to be taken up by the Petitioner before the appellate authority in appeal.

16. Accordingly, the Petitioner is granted time till 10th July, 2025, to file an appeal before the appellate authority under Section 107 of the Central Goods and Service Tax Act, 2017.

17. If the appeal is filed by the Petitioner before 10th 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.

18. 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.

19. 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 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 of this Court in W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India &Ors.

20. The present petition is disposed of in said terms. Pending applications, if any, stand disposed of.

21. Access to the portal shall be given to the Petitioner, to enable access to the orders, notices etc.

PRATHIBA M. SINGH JUDGE RAJNEESH KUMAR GUPTA JUDGE MAY 19, 2025/SV /ss

R H A ENTERPRISES v. Union of India & Ors.

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