Court’s decision
The Delhi High Court partly allowed a writ petition filed by a registered dealer challenging an ex parte adjudication under the GST regime. The Court set aside the assessment order dated 18 April 2024 passed for the tax period April 2018 to March 2019 and remanded the matter to the adjudicating authority to afford the petitioner a proper opportunity to file a reply and avail a personal hearing. While doing so, the Court imposed costs of ₹10,000 payable to the Delhi High Court Staff Welfare Fund and clarified that the challenge to the validity of Notification No. 56/2023–Central Tax remains open and subject to the outcome before the Supreme Court .
Facts
The petitioner, a partnership firm engaged in sanitation-related supplies, was subjected to proceedings under the GST law for the tax period April 2018 to March 2019. A show cause notice dated 4 December 2023 was issued proposing tax demand, followed by a reminder dated 29 February 2024. The petitioner did not file a reply nor attend any personal hearing. Thereafter, the adjudicating authority passed an ex parte order on 18 April 2024, raising tax demand, interest and penalty.
In the writ petition, the petitioner challenged the adjudication order and the show cause notice, and additionally assailed the constitutional validity of Notification No. 56/2023–Central Tax dated 28 December 2023, which extends timelines under Section 168A of the Central Goods and Services Tax Act, 2017. The petitioner contended that the notices were uploaded under the “Additional Notices” tab on the GST portal, which was not visible earlier, resulting in lack of effective notice.
Issues
The principal issues before the Court were whether the ex parte adjudication violated principles of natural justice in the facts of the case, whether the petitioner ought to be afforded a fresh opportunity to respond to the show cause notice, and how such relief should be structured in light of the pending challenge to Notification No. 56/2023–Central Tax before the Supreme Court. The Court also considered the impact of changes to the GST portal on service of notices.
Petitioner’s arguments
The petitioner argued that the show cause notice and subsequent proceedings were not effectively communicated because they were uploaded under the “Additional Notices” tab, which became visible only after changes made to the GST portal on 16 January 2024. It was submitted that despite regular filing of returns, the petitioner remained unaware of the notice dated 4 December 2023 and, consequently, was deprived of an opportunity to file a reply or seek a personal hearing. The petitioner urged that the adjudication order was non-speaking and violative of natural justice. It also pressed the challenge to Notification No. 56/2023–Central Tax, asserting that the extension of limitation was contrary to Section 168A.
Respondents’ arguments
The tax authorities opposed the petition, pointing out that after the initial show cause notice, a reminder notice dated 29 February 2024 was also issued, and that the adjudication order followed thereafter. It was contended that sufficient opportunity had been afforded, and the petitioner’s failure to respond could not invalidate the proceedings. The respondents further submitted that the validity of the impugned notification was already under consideration in a batch of matters, with divergent views of various High Courts and the issue pending before the Supreme Court.
Analysis of the law
The Court examined the duty of adjudicating authorities to adhere to principles of natural justice, particularly where substantial tax demands are raised. It reiterated that even under statutory tax regimes, a taxpayer must be afforded a real and effective opportunity to respond to allegations and be heard before an adverse order is passed. The Court also took judicial notice of the practical difficulties faced by taxpayers due to changes in the GST portal, especially in relation to visibility of notices.
At the same time, the Court balanced this with the broader context that the validity of Notification No. 56/2023–Central Tax is sub judice before the Supreme Court, and therefore refrained from expressing any opinion on its vires at this stage.
Precedent analysis
The Court relied on its own recent decision in Sugandha Enterprises, where under similar circumstances—absence of a reply to the show cause notice and an ex parte adjudication—the matter was remanded to the adjudicating authority to ensure compliance with natural justice. The Court also placed the present case within the framework of a large batch of writ petitions dealing with extensions of limitation under Section 168A, noting the conflicting views of different High Courts and the pendency of SLP No. 4240/2025 before the Supreme Court.
Court’s reasoning
The High Court observed that although the petitioner admittedly did not file a reply to the show cause notice, the combination of portal-related issues, issuance of the notice prior to changes in visibility, and the ex parte nature of the adjudication warranted judicial intervention. The Court emphasised that raising large demands without a hearing, particularly when the taxpayer asserts lack of effective notice, undermines fairness in tax administration.
Accordingly, without adjudicating on the merits of the tax demand or the validity of the impugned notification, the Court found it appropriate to set aside the ex parte order and remand the matter. To balance equities and discourage casual non-participation, the Court imposed costs and prescribed strict timelines for filing reply and conducting a personal hearing.
Conclusion
The Delhi High Court set aside the adjudication order dated 18 April 2024 and remanded the matter to the concerned adjudicating authority. The petitioner was granted time till 15 January 2026 to file a reply to the show cause notice, after which a personal hearing must be afforded and a fresh, reasoned order passed. The petitioner was directed to pay ₹10,000 as costs. The Court expressly clarified that all issues relating to the validity of Notification No. 56/2023–Central Tax remain open and any fresh order would be subject to the Supreme Court’s final decision .
Implications
This decision reinforces the Delhi High Court’s consistent approach of prioritising procedural fairness in GST adjudication, particularly in cases involving ex parte orders. It highlights the judiciary’s sensitivity to technological and portal-related issues affecting service of notices, while also ensuring that taxpayers engage meaningfully with proceedings. Importantly, the ruling situates individual relief within the broader national debate on Section 168A extensions, ensuring that taxpayer rights are preserved pending authoritative resolution by the Supreme Court.
Case law references
- Sugandha Enterprises v. Commissioner, Delhi Goods and Services Tax
Held that ex parte GST adjudication without effective opportunity to respond violates principles of natural justice and warrants remand. - DJST Traders Private Limited v. Union of India
Lead matter in the batch challenging Notifications extending limitation under Section 168A of the CGST Act. - M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax (pending before Supreme Court)
Addresses the legality of Notifications issued under Section 168A, including Notification No. 56/2023–Central Tax.
FAQs
1. Can an ex parte GST assessment be set aside by the High Court?
Yes. If the taxpayer is denied an effective opportunity to file a reply or attend a hearing, courts may set aside the order and remand the matter.
2. Does uploading notices on the GST portal amount to valid service?
While portal service is recognised, courts examine whether notices were reasonably visible and accessible, especially where portal features have changed.
3. Is the validity of Notification No. 56/2023–Central Tax finally settled?
No. The issue is pending before the Supreme Court, and High Court orders are subject to the final outcome.