Facts of the Case

The present writ petition was filed by the Petitioner, M/s Pashmeen Overseas, challenging:

  • Order-in-Original dated 03.08.2024 passed by the Sales Tax Officer for the tax period April 2019 to March 2020;
  • Notifications No. 09/2023 and 56/2023 (Central and State Tax) issued under the CGST Act.

The Petitioner contended that:

  • A Show Cause Notice (SCN) dated 15.05.2024 was issued under Section 73 of the CGST Act;
  • The reply to the SCN was not filed due to negligence of the accountant;
  • No effective opportunity of personal hearing was granted;
  • The order was passed ex-parte, confirming demand and penalties.

Additionally, the Petitioner challenged the validity of notifications extending limitation periods under Section 168A of the CGST Act. 

Issues Involved

  1. Whether the impugned ex-parte order passed under Section 73 without hearing violates principles of natural justice?
  2. Whether failure to file reply due to internal lapse justifies setting aside of adjudication order?
  3. Whether Notifications No. 09/2023 and 56/2023 issued under Section 168A are valid?
  4. Whether adjudication orders can be sustained when no effective opportunity of hearing is granted under Section 75(4) CGST Act?

Petitioner’s Arguments

  • The Petitioner was denied proper opportunity of being heard, violating Section 75(4) of the CGST Act.
  • The reply to SCN could not be filed due to accountant’s failure, which should not prejudice substantive rights.
  • The adjudication order was passed mechanically and ex-parte, without considering merits.
  • Rectification application was also rejected without proper consideration.
  • Notifications extending limitation are ultra vires Section 168A, as proper procedure and GST Council recommendation were allegedly not followed.

Respondent’s Arguments

  • The department contended that:
    • SCN was duly issued and sufficient time was granted;
    • Opportunity of personal hearing was provided;
    • The Petitioner neither filed reply nor appeared for hearing;
    • Therefore, adjudication was rightly conducted ex-parte in accordance with law.

Court’s Findings / Order

The Delhi High Court held:

  • The impugned order was passed without granting effective opportunity of hearing, which violates principles of natural justice.
  • Even if the Petitioner failed to respond earlier, one final opportunity must be granted to contest the matter on merits.
  • Accordingly:
    • The impugned Order-in-Original was set aside;
    • The Petitioner was granted 30 days to file reply to SCN;
    • The Adjudicating Authority was directed to:
      • Provide personal hearing;
      • Pass a fresh reasoned order after considering submissions.
  • The Court clarified that:
    • The issue regarding validity of notifications under Section 168A is kept open;
    • The final adjudication will be subject to the outcome of Supreme Court proceedings. 

Important Clarification

  • The Court did not decide the constitutional validity of Notifications No. 09/2023 and 56/2023.
  • The matter is already pending before the Supreme Court in
    M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors..
  • The High Court emphasized judicial discipline due to conflicting High Court rulings across India.
  • Relief was granted only on procedural grounds (natural justice).

Sections Involved

  • Section 73 – Determination of tax not paid or short paid
  • Section 75(4) – Opportunity of personal hearing
  • Section 168A – Power to extend time limits (CGST Act, 2017)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS23042025CW50852025_193153.pdf 

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