Ex-Parte Order Raising ₹19.79 Lakh GST Demand Set Aside: Delhi HC Permits ₹10.22 Lakh Tax Deposit and Fresh Adjudication [Read Order]

The Delhi High Court, in a recent decision, has set aside an ex parte GST demand of Rs. 19.79 lakh, allowing the petitioner to deposit Rs. 10.22 lakh. The Court directed the reopening of adjudication proceedings to allow the petitioner to file a reply.

The matter arose from a writ petition filed under Article 226 of the Constitution of India challenging the order issued by the Sales Tax Officer.

The petitioner, Chirag Garg, had received a Show Cause Notice (SCN) dated 31st May, 2024, which sought recovery of Rs. 19,79,840/- in taxes. The petitioner contended that the SCN appeared in the “Additional Notices Tab” of the GST portal, which allegedly prevented him from filing a timely reply. As a result, an ex parte order was passed against him.

The respondent department, however, argued that the “Additional Notices Tab” had been operational on the portal since 16th January, 2024, and the petitioner could have accessed and responded to the SCN.

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Therefore, the petitioner could not rely on a lack of awareness as a ground for non-response. The department maintained that the petitioner had an adequate opportunity to reply to the SCN and that the ex parte order was a result of his own inaction.

Counsel for the petitioner submitted that while the petitioner was vigilant regarding his tax obligations and maintained a surplus of approximately Rs. 4.8 crore in his electronic credit ledger, the SCN was inadvertently missed.

The petitioner’s counsel also emphasised that there was no deliberate omission or negligence, and that the taxpayer was prepared to deposit the tax amount of Rs. 10,22,963/- immediately if the adjudication could be reopened to enable filing of a detailed reply and supporting evidence.

The Court observed that the petitioner’s argument regarding non-receipt of the SCN was not tenable since the notice post-dated the portal update. However, considering that the impugned order was ex parte and the petitioner had not been allowed to contest on merits, the High Court directed that the matter be reopened before the Adjudicating Authority.

The Court allowed the petitioner to deposit Rs. 10,22,963/- with the department by 10th July, 2025. The petitioner is also permitted to utilise any available Input Tax Credit (ITC) towards this deposit.

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The petitioner must file a formal reply to the SCN within the same timeline. Following the deposit and filing of the reply, the Adjudicating Authority is required to adjudicate the SCN afresh on merits.

In conclusion, the division bench of Prathiba M. Singh (Judge) and Rajneesh Kumar Gupta (Judge) set aside the original order-in-original, allowing the petitioner to comply with the tax liability and participate in the proceedings. The Court clarified that its observations should not affect the merits of the case. The petition and any pending applications were disposed of accordingly.

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