In this case, the assessee challenged an ex-parte GST demand order issued for the FY 2019–20 on the ground that it was unable to respond to the Show Cause Notice (SCN) as all GST portal activities were managed by its external consultant, who failed to notice and communicate the SCN in time. As a result, the assessee remained unaware of the notice and could not file a reply. Arguing violation of natural justice, the assessee approached the Delhi High Court seeking quashing of the order and restoration of its opportunity to contest the proceedings.
Facts of the Case
- The petitioner (Concept Eateries Pvt. Ltd.) was served a Show Cause Notice (SCN) under the Central Goods and Services Tax Act, 2017 (CGST Act) / corresponding Delhi GST law for the financial year 2019–20.
- The firm’s GST-related filings and portal communications were managed by an external GST consultant. It was this consultant’s responsibility to monitor the GST portal, check notices, and inform the taxpayer.
- The consultant failed to examine the SCN within the prescribed time — as a result, the petitioner remained unaware of the notice and consequently did not file any reply or participate in the adjudication process.
- The Department then passed an ex-parte demand/order against the petitioner, on account of no reply being filed.
- Additionally, the petitioner had challenged the validity of certain Central/State notifications extending limitation periods under the CGST Act; this formed part of the broader writ petition.
What the High Court Held
- The Delhi High Court (DHC), comprising Justices Prathiba M. Singh & Shail Jain, accepted the petitioner’s plea that it had no real opportunity to respond because of the consultant’s failure, and thus the core principle of fair hearing (natural justice) was breached.
- The Court set aside the impugned demand/order passed ex parte.
- The matter was remanded back to the concerned Adjudicating Authority for fresh adjudication. The petitioner must now be given a genuine chance to reply to the SCN, and a proper opportunity for personal hearing must be afforded.
- The Court declined to decide on the challenge to the limitation-extension notifications (under the CGST/Delhi GST law), deferring that part until the outcome of the related matters pending before the higher forum (i.e., the Supreme Court).
Significance/ Implications
- This judgment reinforces that use of a consultant or third-party to manage GST portal communications does not absolve an assessee from the duty to be aware of SCNs; but if the consultant fails to inform, the principle of natural justice demands that the assessee must still be afforded a fair opportunity once the court intervenes.
- It underscores that ex-parte orders passed solely because the assessee didn’t respond — when genuine lack of knowledge can be shown — may not be sustainable.
- It also reflects that High Courts may be cautious in adjudicating the broader constitutional / limitation-related challenges to GST notifications, leaving them open pending higher judicial scrutiny — but will not hesitate to remand matters dealing with procedural fairness.
Conclusion
The Delhi High Court set aside the ex-parte GST demand order after finding that the assessee could not respond to the Show Cause Notice because its GST consultant failed to review the notice on the GST portal. Since this deprived the assessee of a fair opportunity to be heard, the Court held that the principles of natural justice were violated.
The matter was therefore remanded to the Adjudicating Authority for fresh consideration, with directions to provide the assessee a proper chance to file its reply and attend a personal hearing. The Court did not adjudicate the petitioner’s challenge to the GST limitation-extension notifications and left those issues open pending decisions in connected matters before the Supreme Court.