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SUGANDHA ENTERPRISES THROUGH ITS PROPRIETOR DEVENDER KUMAR SINGH v. COMMISSIONER OF DGST & ORS.

Delhi High Court

Apr 23, 2025

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The petitioner, Sugandha Enterprises through its proprietor Devender Kumar Singh, challenged a show cause notice dated 23 May 2024 issued by the Department of Trade & Taxes for the tax period April 2019 to March 2020 and the consequential order dated 30 July 2024 passed under Section 73 of the Central Goods and Services Tax Act, 2017 ("the impugned order"). The petitioner also challenged several notifications (Notification No. 09/2023 - Central Tax dated 31 March 2023; Notification No. 56/2023 - Central Tax dated 28 December 2023; Notification No. 09/2023 - State Tax dated 22 June 2023; and Notification No. 56/2023 - State Tax dated 11 July 2024 — collectively "the impugned notifications").

This petition is part of a batch of petitions (lead matter: W.P.(C) No.16499/2023 DJST Traders Pvt. Ltd. v. Union of India & Ors.). Multiple High Courts have taken differing views on the validity of the impugned notifications. The matter concerning the notifications was pending before the Supreme Court in S.L.P. No. 4240/2025 (M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.). The present writ petition raises both the challenge to the notifications and the grievance that the petitioner was not afforded an opportunity to file a reply to the SCN and was not given a personal hearing before the impugned order was passed.

Legal Issues Presented

Whether the time limit for adjudication of show cause notices and passing orders under Section 73 of the CGST Act for FY 2019-20 could be extended by issuing the Notifications in question under Section 168A of the CGST Act.
Whether the impugned adjudication order (dated 30 July 2024) passed in the present case is invalid for want of opportunity to file a reply and for absence of a personal hearing (i.e., whether principles of natural justice were violated).

Arguments of the Parties

Petitioner's Arguments

The petitioner contended that no opportunity was afforded to file a reply to the SCN dated 23 May 2024 and that the impugned order was passed without hearing the petitioner.
The petitioner argued the impugned order is non-speaking and therefore liable to be set aside on the ground of denial of natural justice.

Submissions by Other Counsel (as recorded)

Various counsels in the batch of petitions submitted that even if the impugned notifications were upheld, many petitioners had been unable to file replies for several reasons, had not been able to avail personal hearings in most cases, and therefore adjudication orders in many matters were passed ex parte, resulting in large demands and penalties.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
W.P.(C) No.16499/2023 — DJST Traders Private Limited v. Union of India & Ors. (lead matter)	Lead writ petition in the batch challenging the impugned notifications and procedure followed for their issuance.	Cited as the lead matter in which broad challenges to the notifications were heard and orders were reserved; this petition is treated as part of that batch and governed by the approach taken therein.
S.L.P. No. 4240/2025 — M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. (Supreme Court)	Challenge to legality/validity/propriety of Notification No.13/2022 and Notification Nos.9 and 56 of 2023 issued under Section 168A of the CGST Act; whether time-limits for adjudication under Section 73/SGST could be extended by these notifications.	The Court noted that the issue of validity of the impugned notifications is pending before the Supreme Court in this SLP and expressly left the question open in the present petition; any order is to be subject to the Supreme Court's outcome.
Allahabad High Court	Decision upholding the validity of Notification No.9 (Central Tax).	Referred to as part of the cleavage of opinions among High Courts; used to demonstrate differing views on the notifications.
Patna High Court	Decision upholding the validity of Notification No.56 (Central Tax).	Referred to as part of the differing judicial views on the notifications, affecting the Court's approach to leave the validity question to the Supreme Court.
Guwahati High Court	Decision quashing Notification No.56 (Central Tax).	Cited to illustrate the conflicting High Court decisions on the notifications; contributed to the conclusion that the matter requires Supreme Court determination.
Telangana High Court (judgment examined in SLP No.4240/2025)	Made observations regarding invalidity of Notification No.56 (Central Tax); the judgment was under consideration by the Supreme Court in SLP No.4240/2025.	Referred to as one of the High Court decisions giving rise to the cleavage of opinion, and noted as placed before the Supreme Court in the SLP.
Punjab & Haryana High Court — order dated 12 March 2025	Disposed connected writ petitions by directing that they be governed by the Supreme Court's decision in the SLP and continued interim orders would operate until final adjudication by the Supreme Court.	This Court noted the Punjab & Haryana High Court's approach of refraining from expressing views on vires of Section 168A and directing matters to be governed by the Supreme Court; used to support coordinating approach and judicial discipline.
Bombay High Court (proceedings mentioned)	Challenges to the notifications were pending before that court (specific findings not recorded in the opinion).	Referenced as another forum where the notifications were being challenged; used to show multiplicity of proceedings and differing outcomes across jurisdictions.

Court's Reasoning and Analysis

The Court first observed that the central question regarding the validity and procedural compliance for issuance of the impugned notifications under Section 168A of the CGST Act is already the subject-matter of a Supreme Court SLP (S.L.P. No.4240/2025). Multiple High Courts had reached divergent conclusions on the notifications (some upholding and some quashing them), thereby creating a cleavage of judicial opinion.

Given that cleavage and the pending Supreme Court adjudication, the Court declined to decide the vires of the impugned notifications in this petition and held that any challenge to the notifications in the present proceedings would be subject to the outcome of the Supreme Court matter. The Court noted the approach of other High Courts (including Punjab & Haryana High Court) to refrain from expressing views and to conserve judicial discipline by awaiting the Supreme Court's decision.

Separately, on the factual record of this petition, the Court examined the impugned adjudication order and the administrative record and found that the petitioner had not filed any reply to the SCN and that the impugned order indicated that the taxpayer had not filed objections/reply in DRC-06 nor appeared for personal hearing despite opportunities. Nonetheless, the Court concluded that the petitioner had not been afforded an adequate opportunity to be heard in the present case and that, in the interests of justice and principles of natural justice, the petitioner should be permitted to contest the matter on merits.

Consequently, the Court set aside the impugned order, granted the petitioner 30 days to file a reply to the SCN, directed the Adjudicating Authority to issue a notice for personal hearing (to be communicated to the petitioner's counsel on the mobile number and email recorded), and directed that the Adjudicating Authority consider the reply and the submissions made at the personal hearing and pass a fresh order. The Court explicitly kept open the question of the validity of the impugned notifications, making any order passed by the Adjudicating Authority subject to the Supreme Court's decision.

Holding and Implications

Holding: The writ petition is disposed of in part: the impugned adjudication order dated 30 July 2024 is set aside and the petitioner is granted 30 days to file a reply to the SCN; the Adjudicating Authority shall issue a notice for personal hearing and, after considering the reply and hearing, pass a fresh order. The question of the validity of the impugned notifications is left open and any order passed shall be subject to the outcome of the Supreme Court S.L.P. No.4240/2025.

Implications:

The direct practical effect for the petitioner is reinstatement of an opportunity to be heard: 30 days to file a reply and entitlement to a personal hearing before the Adjudicating Authority, followed by a fresh adjudication on the SCN.
The Court did not decide the broader constitutional or statutory question regarding the validity of the impugned notifications under Section 168A of the CGST Act; that issue remains pending before the Supreme Court and any subsequent administrative/adjudicatory orders will be subject to that outcome.
No new precedent on the vires of the impugned notifications was laid down by this Court in this opinion; the decision primarily resolves the procedural fairness issue in the present petition by providing the petitioner an opportunity to be heard.

Show all summary ...

W.P.(C) 4779/2025 Page 1 of 7 $~122

* IN THEHIGH COURTOF DELHIAT NEW DELHI Date of Decision: 23^rd

April, 2025

+ W.P.(C) 4779/2025&CM APPL. 22008/2025

SUGANDHA ENTERPRISES THROUGH ITS PROPRIETOR

DEVENDER KUMAR SINGH .....Petitioner Through: Mr. Ujjwal Jain,

Adv.(M:9717595497)

versus

COMMISSIONER OF DGST & ORS. .....Respondents Through: Mr. Mudit Gupta, Adv.

(M:9910687976)

Mr. Vivek Sharma& Ms. Prernaa Singh, Advs. for UOI.

(M:9810418275)

Mr. Vaishali Gupta, Panel Counsel (Civil), GNCTD.

CORAM:

JUSTICE PRATHIBA M. SINGH

JUSTICE RAJNEESH KUMAR GUPTA

Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner- Devender Kumar Singh challenging the show cause notice dated 23rd May, 2024 (hereinafter, 'the SCN') issued by the Department of Trade & Taxes upon the Petitioner concern pertaining to the tax period April, 2019 to March, 2020. The petition also challenges the consequent order dated 30th July, 2024 (hereinafter, 'the impugned order') passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter, 'CGST Act, 2017')

3. Additionally, the present petition also challenges the Notification No.

9/2023- Central Tax dated 31st March, 2023 and 56/2023- Central Tax dated 28th December, 2023 as also Notification No. 09/2023-State Tax dated 22nd June, 2023 and Notification No. 56/2023- State Tax dated 11th July, 2024 (hereinafter, 'the impugned notifications').

4. The present petition is a part of a batch of petitions wherein inter alia, the impugned notifications have been challenged. The W.P.(C) No. 16499/2023 titled DJST Traders Private Limited v. Union of India & Ors. is the lead matter in the said batch of petitions. On the last date of hearing i.e., 22rd April, 2025, the parties were heard at length qua the validity of the impugned notifications 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. As observed by this Court in the order dated 22nd April, 2025 as well, since the challenge to the above mentioned notifications is presently under consideration 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.,

the challenge made by the Petitioner to the impugned notification in the present proceedings shall also be subject to the outcome of the decision of the Supreme Court.

6. On facts, however, the submission of the Petitioner in the present petition is that the Petitioner was not afforded with an opportunity to file a reply to the SCN dated 23^rd

May, 2024 and the impugned order was passed

without affording the Petitioner with an opportunity to be heard. Hence, the impugned order is a non-speaking order and is liable to be set aside on the said ground.

7. Heard. The Court has considered the submissions made. The Court has perused the records. In this petition, as mentioned above, no reply to the SCN has been filed by the Petitioner. Relevant portion of the impugned order reads as under:

And whereas, the taxpayer had neither deposited the proposed demand nor filed their objections/ reply in DRC-06 within the stipulated period of time, therefore, following the Principle of Natural Justice, the taxpayer was granted opportunities of personal hearing for submission of their reply/objections against the proposed demand before passing any adverse order.

And whereas, neither the taxpayer filed objections/reply in DRC 06 nor appeared for personal hearing despite giving sufficient opportunities, therefore, the undersigned is left with no other option but to upheld the demand raised in SCN/DRC

01. DRC 07 is issued accordingly.

8. This Court is of the opinion that since the Petitioner has not been afforded an opportunity to be heard and the said SCN and the consequent impugned order have been passed without hearing the Petitioner, an opportunity ought to be afforded to the Petitioner to contest the matter on merits.

9. Accordingly, the impugned order is set aside. The Petitioner is granted 30 days' time to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:

Mobile No.: 9717595497 E-mail Address : ujjwaljainadvocate@gmail.com

10. 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.

11. The present writ petition is disposed of in above terms. All the pending applications, if any, are also disposed of.

12. Mr. Mudit Gupta, ld. Counsel for Respondent No. 1's appearance shall be taken as reflected for order dated 16^th

April, 2025 as well.

13. 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.

14. The petition is disposed of in these terms. All pending applications, if any, are also disposed of.

PRATHIBA M. SINGH

JUDGE

RAJNEESH KUMAR GUPTA

JUDGE

APRIL 23, 2025

dj/ss (corrected & released on 29^th

April, 2025)