HEADNOTE
M/s Seaton Impex v. Sales Tax Officer Class II (AVATO), Ward 83, Zone-7, Delhi & Anr.
Court: High Court of Delhi
Bench: Justice Prathiba M. Singh and Justice Shail Jain
Date of Judgment: 10 December 2025
Citation: W.P.(C) 18777/2025
Laws / Sections Involved: Section 73 Central Goods and Services Tax Act, 2017; Section 168A CGST Act; Articles 14 and 226 Constitution of India; Notification No. 56/2023–Central Tax
Keywords: GST adjudication, Section 73 CGST, limitation extension, Notification 56/2023, natural justice, ex parte assessment, remand, GST Council recommendation
Summary:
The Delhi High Court set aside an ex parte GST adjudication order raising substantial tax, interest and penalty demands against M/s Seaton Impex for FY 2019–20, holding that the assessee was not afforded a meaningful opportunity of hearing. Without ruling on the vires of Notification No. 56/2023–Central Tax—which extends limitation for GST adjudication and is pending consideration before the Supreme Court—the Court remanded the matter to the adjudicating authority. The Court granted the petitioner time to file a reply to the show cause notice and directed a fresh reasoned order after personal hearing, subject to the outcome of the Supreme Court proceedings. Costs of ₹10,000 were imposed, and access to the GST portal was ordered to be restored. The judgment reinforces procedural fairness in GST adjudication while maintaining judicial discipline amid conflicting High Court views on limitation extensions.
Court’s decision
The Delhi High Court allowed the writ petition to the limited extent of setting aside the impugned adjudication order dated 22 July 2024 passed by the Sales Tax Officer (AVATO) for the tax period April 2019 to March 2020. Without expressing any final view on the constitutional validity of Notification No. 56/2023–Central Tax, the Court remanded the matter to the adjudicating authority. The petitioner was granted time to file a reply to the show cause notice, a personal hearing was directed to be afforded, and a fresh reasoned order was mandated. The Court imposed costs of ₹10,000 payable to the Delhi High Court Staff Welfare Association and directed restoration of GST portal access to enable effective participation.
Facts
M/s Seaton Impex, a proprietorship concern through its proprietor Mr. Harmeet Singh, was issued a show cause notice dated 21 May 2024 for FY 2019–20 under Section 73 of the CGST Act, alleging tax liability with interest and penalty. A reminder followed on 24 June 2024. The petitioner did not file a reply or attend personal hearing, following which an adjudication order dated 22 July 2024 was passed raising demands aggregating to approximately ₹6.98 lakh.
The petitioner approached the High Court challenging both the show cause notice and the adjudication order, and additionally assailing the vires of Notification No. 56/2023–Central Tax dated 28 December 2023, which extends limitation for adjudication under Section 73 pursuant to Section 168A CGST Act. The challenge was placed in the context of a nationwide batch of petitions where divergent High Court views exist and the issue is pending before the Supreme Court in SLP No. 4240/2025.
Issues
The principal issues before the Court were: (i) whether the impugned adjudication order, passed ex parte without a reply or personal hearing, violated principles of natural justice warranting interference; and (ii) whether, in light of the pending Supreme Court proceedings on the validity of Notification No. 56/2023–Central Tax, the High Court should adjudicate the vires or adopt a course preserving rights pending final determination. Ancillary issues included access to the GST portal, opportunity to file replies, and appropriate balancing of equities.
Petitioner’s arguments
The petitioner contended that the adjudication was ex parte and non-speaking, passed without affording a meaningful opportunity to contest the allegations on merits. It was urged that practical impediments prevented filing of replies and attending hearings, and that denial of hearing vitiated the order. The petitioner also challenged the validity of Notification No. 56/2023–Central Tax on the ground that it purportedly extended limitation contrary to Section 168A requirements and without proper GST Council recommendation, an issue already engaging multiple High Courts and the Supreme Court. The petitioner sought setting aside of the order and remand for de novo consideration with full opportunity.
Respondents’ arguments
The respondents relied on the issuance of the show cause notice and reminder to contend that sufficient opportunity was granted. They submitted that adjudication proceeded in accordance with the statutory framework and that the petitioner’s non-participation justified confirmation of demand. On the vires challenge, the respondents urged judicial restraint in view of the pending Supreme Court proceedings and the need for administrative certainty, submitting that any relief, if at all, be tailored to procedural fairness without pronouncing on validity.
Analysis of the law
The Court examined the settled principle that tax adjudication, though administrative, must comply with natural justice. Where orders are passed ex parte, courts routinely intervene to ensure that the assessee is afforded an effective opportunity to present its case, particularly when substantial demands and penalties are involved. The Court noted that across a batch of matters concerning Notification No. 56/2023–Central Tax, it had adopted a calibrated approach—either remanding matters or relegating assessees to statutory remedies—while expressly keeping the vires issue open pending Supreme Court adjudication.
The Court emphasized judicial discipline where conflicting High Court views exist and the apex court is seized of the controversy. In such circumstances, procedural remediation—rather than a merits determination on vires—best serves justice.
Precedent analysis
The Court referred to its own prior orders in the GST batch (including DJST Traders Pvt. Ltd. as the lead matter) and to similar remand directions issued in cases like Sugandha Enterprises, where no replies were filed and adjudication proceeded ex parte. It also took note of divergent High Court decisions upholding or striking down Notification No. 56/2023–Central Tax and the Supreme Court’s order issuing notice and considering interim relief in SLP No. 4240/2025. These references informed the Court’s choice to avoid a final pronouncement on vires while granting procedural relief.
Court’s reasoning
Applying the above principles, the Court held that the petitioner did not receive a proper opportunity to be heard on merits and that fairness demanded a remand. The Court found it appropriate to set aside the impugned order, impose modest costs to balance equities, and direct a structured process: a defined timeline to file a reply, issuance of a personal hearing notice, and a fresh reasoned order considering submissions. The Court also directed restoration of GST portal access to ensure the petitioner can effectively comply.
Crucially, the Court clarified that any fresh order would remain subject to the Supreme Court’s eventual decision on the validity of Notification No. 56/2023–Central Tax, thereby preserving rights on both sides and avoiding prejudice.
Conclusion
The writ petition was disposed of by setting aside the adjudication order and remanding the matter for de novo adjudication with full opportunity of hearing. Costs of ₹10,000 were imposed, timelines were fixed for reply and hearing, portal access was ordered, and the vires issue was expressly kept open subject to the Supreme Court’s determination.
Implications
This decision reinforces that GST authorities must adhere to procedural fairness, especially when adjudication is ex parte and raises significant demands. It also exemplifies judicial restraint amid nationwide uncertainty on limitation extensions under Section 168A, ensuring that assessees are not irreversibly prejudiced while higher courts resolve the legal controversy. Practically, the ruling provides a roadmap for similar cases—remand with safeguards—pending the Supreme Court’s verdict.
CASE LAW REFERENCES
• DJST Traders Pvt. Ltd. v. Union of India – Batch approach to challenges against Notification 56/2023
• Sugandha Enterprises v. Commissioner, Delhi GST – Remand where adjudication proceeded ex parte
• M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax (SLP) – Supreme Court seized of limitation extension issue
FAQs
Q1. Can GST adjudication orders passed ex parte be set aside?
Yes. Courts routinely set aside ex parte GST orders where a meaningful opportunity of hearing was not afforded.
Q2. Did the Delhi High Court decide the validity of Notification 56/2023–Central Tax?
No. The Court kept the issue open, subject to the Supreme Court’s pending decision.
Q3. What relief was granted to the taxpayer?
The order was set aside, the matter remanded, time granted to file a reply, personal hearing directed, portal access restored, and costs imposed.
