Failure to Respond to SCN Not Excused by CA’s Lapse: Delhi HC Dismisses Mobile Phone Dealer's Plea Against ₹2.32 Lakh GST Demand [Read Order]

The Delhi High Court has dismissed a mobile phone dealer’s plea against the Goods and Services Tax (GST) demand of Rs 2.32 lakhs, holding that the failure of the petitioner to respond to the show cause notice cannot be excused as the chartered accountant’s lapse in informing the petitioner about the same.

The petitioner, M/S Phone Zone Nxt, obtained GST registration in July 2017 and was filing returns regularly. However, the registration was later suspended at the petitioner’s own request.

Subsequently, the department issued SCNs for assessment years beginning 2017–18, citing mismatches in Input Tax Credit (ITC) and retrospective cancellation of certain suppliers’ registrations.

A demand of ₹2,32,166 was raised, and reminders were sent for personal hearings. The petitioner neither filed replies nor appeared before the authorities, leading to ex parte demand orders dated 20 August 2024. Similar proceedings followed for subsequent years, resulting in multiple impugned orders 

The petitioner contended that the GST portal was linked to the email address of his Chartered Accountant (CA). It was further argued that the CA failed to communicate notices, and the petitioner should not be penalised for this lapse.

Also, it was said that the petitioner was willing to deposit 50% of the outstanding demand, seeking equitable relief from the Court. The petitioner depended on the Division Bench ruling in M/s Walsons Services Pvt. Ltd. v. STO, DGST (2025), where the Court had exercised discretion in favour of the petitioner subject to costs.

The Division Bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul observed that the suspension of GST registration was within the petitioner’s knowledge. It was further observed that linking the registration to the CA’s email was a conscious choice, and the petitioner cannot shift responsibility for non-compliance.

The bench noted that no action was shown to have been taken against the CA, making the blame-shifting argument non-reliable.

It was observed that,

It is very easy to blame a professional, like the one in the present case, as such professional is not before this Court to defend his interest.

24. Even otherwise, from the record we are unable to satisfy ourselves as to the ground raised by the petitioner is sufficient enough to infer that there was a default on the part of the Chartered Accountant and the petitioner was required to suffer for the same.

It was also noted that the precedent in Walsons Services was distinguishable, as the factual matrix differed. The court held that even the petitioner’s offer to deposit 50% of the demand did not justify deviation from statutory procedure. Thus, the petition was dismissed.

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