GST SCN Unanswered and Ex Parte Order Passed: Delhi HC Remands Case, Validity of Notification in Question Awaits SC Verdict [Read Order]

The Delhi High Court has set aside an ex parte GST demand order against the petitioner, holding that the petitioner was denied a fair opportunity to respond to the show cause notice.

While the demand order was quashed, the Court left open the larger constitutional challenge to Notification No. 56/2023, noting that its validity is already pending before the Supreme Court in M/s HCC‑SEW‑MEIL‑AAG JV v. AssistantCommissioner of State Tax.

The impugned order dated 16 August 2024 had been passed by the Sales Tax Officer, for the tax period April 2019–March 2020. The petitioner, Mohammed Aamir argued that the notifications extending limitation under Section 168A of the CGST Act were invalid, and that he had not been afforded a proper opportunity to reply to the show cause notice (SCN).

The record showed that an SCN was issued on 24 May 2024, followed by a reminder on 8 August 2024, but no reply was filed. The adjudicating authority proceeded ex parte, raising a demand and penalty.

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The Court noted that similar challenges to Notification No. 56/2023 are already pending before the Supreme Court in M/s HCC‑SEW‑MEIL‑AAG JV v. Assistant Commissioner of State Tax . In that matter, the apex court is examining whether time limits for adjudication under Section 73 of the GST Act could be extended through notifications issued under Section 168A.

Regarding the same matter, conflicting High Court rulings have emerged, the Allahabad High Court upheld Notification No. 9/2023, the Patna High Court upheld Notification No. 56/2023, while the Guwahati High Court quashed Notification No. 56/2023. The Telangana High Court also cast doubt on its validity, and the issue is now squarely before the Supreme Court.

The Delhi High Court referred to its own earlier order in Sugandha Enterprises v. Commissioner DGST, where, under similar circumstances, an ex parte order was set aside because the petitioner had not been allowed to reply to the SCN. In that case, the Court held: “Since the Petitioner has not been afforded an opportunity to be heard and the SCN and consequent order were passed without hearing, an opportunity ought to be afforded to contest the matter on merits.”

Applying the same principle, the Division Bench of Justice Prathiba M. Singh and Justice Renu Bhatnagar in this case held that natural justice had been breached. The impugned order was accordingly set aside, subject to payment of ₹20,000 as costs to the Delhi High Court Clerks Association.

The petitioner was granted time until 15 January 2025 to file a reply to the SCN. The adjudicating authority was directed to issue a personal hearing notice and pass a fresh reasoned order after considering the reply and submissions.

Importantly, the Court clarified that the validity of Notification No. 56/2023 was left open, with any fresh order subject to the outcome of the Supreme Court’s decision in M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax &Ors. The Court also noted that parallel challenges to State notifications are being considered in Engineers India Ltd v. Union of India (W.P.(C) 9214/2024).

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