Facts of the Case

Ruchika Industries, through its proprietor Rakesh Kumar Dhingra, challenged an order dated 24.08.2024 passed by the Sales Tax Officer, Delhi, along with the underlying show-cause notice dated 29.05.2024. The petition also challenged Notification No. 56/2023-Central Tax and the corresponding State Tax notification, issued to extend limitation under Section 168A of the CGST Act, 2017 — a challenge already pending consideration before the Supreme Court in a batch of connected matters. On facts, the petitioner submitted that its proprietor had been hospitalised multiple times during 2023-24 for medical reasons, causing him to miss the SCN, which was also initially uploaded only under the 'Additional Notices' tab, resulting in an ex-parte demand.

Issues Involved

  1. Whether the impugned demand order, passed without a reply having been filed to the SCN due to the proprietor's documented medical hospitalisation, deserves to be set aside.
  2. Whether the challenge to Notification No. 56/2023 issued under Section 168A should be decided at this stage, given that an identical challenge is pending before the Supreme Court.

Petitioner's Arguments

  • The proprietor was hospitalised multiple times in 2023-24, as evidenced by medical records from Medanta Hospital, and could not attend to the SCN even after it later became visible.
  • The impugned notification extending limitation under Section 168A was invalid, since the requisite prior recommendation of the GST Council was allegedly not obtained before its issuance.
  • No reply was filed and the impugned order was accordingly passed ex-parte without hearing the petitioner.

Respondent's Arguments

  • The department submitted that the petitioner had continued filing regular returns through the relevant period, so missing the SCN due to medical reasons was not a credible justification.
  • On the notification challenge, the department relied on the fact that the correctness of Section 168A notifications was already under consideration by various High Courts and the Supreme Court, with differing outcomes across jurisdictions.

Court Order / Findings

  • The Court noted the sharp divergence among High Courts on the validity of Notification Nos. 9 and 56 of 2023, and that the Supreme Court was already seized of the issue in SLP No. 4240/2025, HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax.
  • Without deciding the vires of the notifications, the Court set aside the impugned order because the Petitioner had not been afforded a genuine opportunity to be heard, given the documented medical hospitalisation of its proprietor during the SCN period.
  • The Petitioner was granted time to file a reply to the SCN, following which a personal hearing was to be granted and a fresh reasoned order passed.
  • The validity challenge to the notifications was expressly kept open, to abide by the outcome of the Supreme Court's decision and the Delhi High Court's own lead matter, Engineers India Limited v. Union of India.

Important Clarification

  • Where genuine medical incapacity of a proprietor coincides with the SCN period, courts will set aside an ex-parte GST order and grant a fresh opportunity, even while treating the wider vires challenge to limitation-extension notifications as sub judice.
  • Access to the GST portal must be restored to enable the taxpayer to upload its reply and view related documents once such relief is granted.

Sections Involved

  • Section 168A, CGST Act, 2017 – power to extend time limits in special circumstances on GST Council recommendation.
  • Notification No. 56/2023-Central Tax – extension of time for passing orders under Section 73 for FY 2019-20.
  • Section 73, CGST Act, 2017 – adjudication of tax short paid, no fraud alleged.

Decision – In Favour of

The decision is partly in favour of the assessee, Ruchika Industries — the ex-parte demand order was set aside and a fresh opportunity granted, though the larger notification-validity question remains undecided pending the Supreme Court's ruling.

Case Details

High Court of Delhi at New Delhi – W.P.(C) 13507/2025 & CM APPL. 55441-55442/2025 – Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Shail Jain – Order dated 09.09.2025.

Link to Download the Order

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