Delhi HC sets aside SCN Passed by Sales Tax Officer  without considering Challenge of Assessee against Notification [Read Order]

The Delhi High Court has set aside the show cause notice (SCN) passed by Sale Tax officer which was without considering the challenge made by  Assessee against a sales tax notification.

The Petitioner – M/s Mascon under Article 226 and 227 of the Constitution of India, inter alia, assailing the show cause notice dated 29th May 2024 as also the consequent order dated 7th August 2024 passed by Sales Tax Officer Class II /AVATO, Ward 56, Zone 4, Delhi.

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The petition also challenges the vires of Notification No. 56/2023Central Tax dated 28th December, 2023 as also the Notification No. 56/2023-State Tax dated 11th July, 2024 (‘impugned notifications’). The validity of the impugned notifications were under consideration before this Court in a batch of petitions with the lead petition being titled ‘DJST Traders Pvt. Ltd. vs. Union of India and Ors.’.

 In the said batch of petitions, on 22nd April, 2025, the parties were heard at length qua the validity of the impugned notifications and accordingly,

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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.

Thereafter, on 23rd April, 2025, this Court, having noted that the validity of the impugned notifications is under consideration before the Supreme Court, had disposed of several matters in the said batch of petitions after addressing other factual issues raised in the respective petitions. Additionally, while disposing of the said petitions, this Court clearly observed that the validity of the impugned notifications therein shall be subject to the outcome of the proceedings before the Supreme Court.

However, in cases where the challenge is to the parallel State Notifications, the same have been retained for consideration by the Court. The lead matter in the said batch titled Engineers India Limited v. Union of India &Ors. On facts, however, the Show Cause Notice was issued to the Petitioner on 29th May 2024 by Sales Tax Officer Class II / AVATO, Ward 56, Zone 4, Delhi. Thereafter, two reminder notices were issued to the Petitioner on 9th July 2024 and 20th July 2024 respectively. However, no reply was filed by the Petitioner to the Show Cause Notice leading to passing of the impugned order dated 7th August 2024. The Petitioner is also stated to have filed a rectification application on 21st March, 2025 which was rejected on 2nd April, 2025.

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A division bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta finding that the Petitioner did not get a proper opportunity to be heard and no reply to the Show Cause Notice has been filed by the Petitioner, remanded the matter back to the concerned Adjudicating Authority.

The court set aside the order and granted the Petitioner a time till 10th July 2025, to file the reply to Show Cause Notice. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner.

The reply filed by the Petitioner to the Show Cause Notice 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 Show Cause Notice shall be passed accordingly.

To Read the full text of the Order CLICK HERE

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