“Where It Is Possible to Do So” Cannot Be a License to Delay: Delhi HC Slams CGST Dept for Keeping SCNs Pending Nearly a Decade [Read Order]
Delhi High Court quashes Rs. 60 crore service tax demand, ruling decade-long delay in adjudication violates principles of natural justice
![“Where It Is Possible to Do So” Cannot Be a License to Delay: Delhi HC Slams CGST Dept for Keeping SCNs Pending Nearly a Decade [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Delhi-HC-CGST-SCN-taxscan.jpeg "“Where It Is Possible to Do So” Cannot Be a License to Delay: Delhi HC Slams CGST Dept for Keeping SCNs Pending Nearly a Decade [Read Order]")
In a recent judgment, the Delhi High Court slams that the phrase “where it is possible to do so,” used in Section 73(4B) of the Finance Act, 1994, could not be treated as a license to keep tax proceedings pending for years without resolution. Shyam Indus Power Solution Private Limited, an EPC contractor involved in setting up sub-stations and transmission lines, received five SCNs...
In a recent judgment, the Delhi High Court slams that the phrase “where it is possible to do so,” used in Section 73(4B) of the Finance Act, 1994, could not be treated as a license to keep tax proceedings pending for years without resolution.
Shyam Indus Power Solution Private Limited, an EPC contractor involved in setting up sub-stations and transmission lines, received five SCNs between 2013 and 2018 for financial years ranging from 2008-09 to June 2017.
The company submitted timely replies and even attended hearings but the adjudicating authority failed to pass final orders for as long as ten years in some cases. The department eventually issued a consolidated order on 23.08.2024, demanding Rs. 30.68 crore in service tax and imposing a nearly equal amount as a penalty.
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The petitioner’s counsel argued that the prolonged pendency of the SCNs caused serious prejudice and that they were led to believe the proceedings had been dropped, especially in the absence of any communication or action for years. They also argued that several notices related to hearings in 2024 were sent to incorrect email addresses and no genuine opportunity for a hearing was granted before the final order.
The department defended the delay citing procedural complexities and appeals, including a remand from the CESTAT in one of the SCNs. They argued that proper notices had been issued and the order was passed on merits.
The bench comprising Justices Yashwant Varma and Justice Harish Vaidyanathan Shankar found the department’s actions lacking in diligence. The court relied on its earlier ruling in Vos Technologies India Pvt. Ltd. v. Director General, which explained that tax proceedings involving financial or penal consequences must be concluded within a reasonable timeframe.
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The court held that statutory language such as “where it is possible to do so” provides limited flexibility for exceptional situations not a blanket justification for administrative lethargy. The court observed that the CGST department had not presented any insurmountable reasons for the inordinate delay, and pinpointed that had one of the SCNs been adjudicated quickly in 2015, the other similar SCNs could have followed suit. The writ petition was disposed of.
To Read the full text of the Order CLICK HERE
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