GST Dept Prima Facie Cannot Reconfirm Dropped SCN Demands After Remand: Delhi HC Directs CESTAT to Examine Validity [Read Order]

In a recent decision, the Delhi High Court observed that the GST Department cannot, even prima facie, reconfirm demands that were previously dropped in an earlier adjudication, unless those demands were specifically challenged or directed to be re-examined upon remand.

Ahlcons India Private Limited filed a writ petition under Article 226 of the Indian Constitution, challenging the Order-in-Original dated 30 March 2025, which was passed after remand by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

The petitioner is a company engaged in works contracts relating to aluminium door and window manufacturing, and had earlier been served with multiple show cause notices for non-payment of service tax for the years 2006 to 2014.

The petitioner’s counsel argued that in the original adjudication, demands relating to subcontractor services were dropped and not challenged by the department. CESTAT, in its earlier orders dated 6 October 2017 and 7 May 2024, had remanded the matter only for reconsideration of specific issues such as tax on mobilisation advance and classification of services.

However, in the remand proceedings, the adjudicating authority not only re-examined the remanded issues but also reconfirmed demands that had already been dropped earlier.

The counsel further argued that there had been a delay of more than six years in passing the impugned order after the remand, and that the authority had acted beyond the scope of the directions issued by CESTAT. The petitioner also pointed out that the GST Department had never appealed the original dropping of certain demands, so those matters had attained finality.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the dropped demands were not under challenge before CESTAT and were not part of the remand. It explained that the scope of remand was limited only to the issues raised in appeal, and that reopening settled demands without fresh adjudication was not justified. The court also took note of the delay in the fresh adjudication.

While disposing of the petition, the court permitted the petitioner to pursue its remedy before CESTAT. The court clarified that no pre-deposit would be required for the earlier dropped demands and that CESTAT should consider whether the reconfirmation of such demands was valid.

The court also allowed adjustment of Rs. 32,45,459 already deposited by the petitioner and directed that any remaining pre-deposit be made within three months.

CESTAT was asked to adjudicate the matter on merits without insisting on further pre-deposit or raising the issue of limitation. The writ petition was accordingly disposed of.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates