Adit Buildwell Pvt. Ltd. Vs Commissioner of Central Goods and Service Tax (Delhi High Court)
Failure to Consider Request for More Time Violates Natural Justice: Delhi HC Sets Aside Service Tax Order
Summary: The Delhi High Court has set aside a service tax adjudication order after finding that the authority failed to consider the taxpayer’s request for additional time to produce documents. The Court held that a quasi-judicial authority must deal with such a request and take an appropriate decision before proceeding to adjudicate the matter.
In Adit Buildwell Pvt. Ltd. v. Commissioner of Central Goods and Service Tax, South Commissionerate, New Delhi & Anr., the Court found that the petitioner had not received a reasonable opportunity to defend its case. It remanded the matter for fresh consideration from the stage at which the proceedings stood when the extension request was made.
Case Details and Background
The judgment in W.P.(C) 2728/2024 was delivered on 29 October 2026 by Justice Avneesh Jhingan and Justice Amit Sharma.
The petitioner, a registered dealer with the Service Tax Department, challenged an order dated 24 November 2023 passed by the Commissioner, Central Goods and Service Tax, Delhi South Commissionerate.
A show cause notice had been issued to the petitioner, which submitted its reply on 23 May 2022. Subsequently, an opportunity of personal hearing was provided on 7 November 2023.
At the petitioner’s request, the matter was adjourned to 15 November 2023. On that date, the petitioner sought further time to produce the requisite documents. However, the adjudicating authority passed the challenged order on 24 November 2023 without considering that request.
Petitioner Alleges Denial of Reasonable Opportunity
The petitioner contended that it had not been granted a reasonable opportunity to defend the proceedings.
Its counsel referred to an email dated 15 November 2023 seeking additional time. The Court recorded that the request was for permission to produce the additional material by 24 November 2023.
The petitioner’s grievance was that the authority proceeded to decide the matter without addressing the pending request. Consequently, the documents it intended to submit were not considered before the order was passed.
The dispute before the High Court therefore concerned the fairness of the adjudication process, rather than the substantive merits of the service tax liability.
Department Relies on Opportunities Already Granted
The Department opposed the petition, arguing that sufficient opportunities had already been provided.
It submitted that the petitioner had received a personal hearing on 7 November 2023 and had been allowed time until 15 November 2023 to place additional material on record.
According to the Department, no additional documents were furnished even thereafter. It maintained that the authority waited for a further nine days before passing the order on 24 November 2023.
On this basis, the Department sought to justify the adjudication as having followed adequate opportunities for compliance.
Waiting Without Deciding the Request Was Insufficient
The High Court rejected the Department’s contention that merely waiting before issuing the order answered the petitioner’s grievance.
The Court observed that the request for additional time had been neither considered nor rejected. It further noted that the order was passed on 24 November 2023, the very date up to which the petitioner had sought time.
Importantly, examination of the adjudication order showed that the petitioner’s email seeking an extension was not even noted.
The Court also found that one of the grounds relied upon for passing the order was the petitioner’s failure to produce relevant documents. This made consideration of the pending request particularly material to the fairness of the proceedings.
Quasi-Judicial Authority Must Address Extension Requests
The Court held that the minimum expected from a quasi-judicial authority was to deal with the request for further time and then take an appropriate decision.
Its reasoning focused on the authority’s failure to address the request. The judgment did not direct that every request for an adjournment or extension must necessarily be granted.
In this case, however, the authority proceeded without recording or deciding the request and then relied on non-production of documents. The High Court concluded that the petitioner had been denied a reasonable opportunity of defence.
Alternative Appeal Did Not Prevent Writ Relief
Although the petitioner had an alternative remedy of appeal, the High Court entertained the writ petition.
It relied on Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1, which recognises exceptions to the general rule of requiring parties to pursue an effective statutory remedy.
One such exception arises where there is a violation of the principles of natural justice. Having found such a violation, the Court exercised its writ jurisdiction rather than directing the petitioner to pursue the appellate remedy.
Order Set Aside and Proceedings Restored
The High Court set aside the order dated 24 November 2023 and remanded the matter to the Commissioner for a fresh decision from the stage existing on 15 November 2023.
It directed the petitioner or its authorised representative to appear before the authority on 2 December 2026 at 11:00 a.m.
The petition and pending application were disposed of. The Court granted procedural relief; the underlying service tax dispute remains for determination in accordance with law.
Cases Discussed
1. Whirlpool Corpn. v. Registrar of Trade Marks (Supreme Court); (1998) 8 SCC 1. The Supreme Court recognised that the availability of an effective alternative statutory remedy does not operate as an absolute bar to a writ petition under Article 226 of the Constitution. Exceptions include enforcement of fundamental rights, violation of the principles of natural justice, proceedings wholly without jurisdiction and challenges to the vires of legislation. The Delhi High Court relied upon this decision to entertain the petition despite the availability of an appellate remedy, since the adjudication order had been passed without granting the petitioner a reasonable opportunity of defence.
FULL TEXT OF THE JUDGMENT OF DELHI HIGH COURT
1. This petition is filed seeking quashing of the order dated 24.11.2023 passed by the Commissioner, Central Goods and Service Tax, Delhi South Commissionerate, New Delhi.
2. The brief facts are that the petitioner was registered dealer with the Service Tax Department. A show cause notice (for short ‘SCN’) was issued to the petitioner. The reply to the SCN was filed on 23.05.2022. The petitioner was afforded an opportunity of personal hearing on 07.11.2023. The matter was adjourned to 15.11.2023 at request of the petitioner. On 15.11.2023, the petitioner sought further time till 24.11.2023 to produce the requisite documents. The request was not considered and impugned order was passed on 24.11.2023.
3. Learned counsel for the petitioner submits that a reasonable opportunity to defend the case was not granted. Vide email dated 15.11.2023 the petitioner sought a further period of ten days but without considering the request the impugned order was passed.
4. Per contra the petitioner was granted sufficient opportunities to defend the case. The opportunity of personal hearing was afforded to the petitioner on 07.11.2023 and time till 15.11.2023 was granted to place on record the additional material but no attempt was made to file additional material. No document was filed till 23.11.2023 and only then the impugned order was passed on 24.11.2023.
5. Heard the learned counsels for the parties.
6. The contention of learned counsel for the respondents that after waiting for nine days the impugned order was passed lacks merit. Once the request for further time was not considered then there was no occasion for the petitioner to file the additional documents and even otherwise the impugned order was passed on 24.11.2023 whereas the time sought was till 24.11.2023.
7. The petitioner has an alternative remedy of appeal, however, the self-imposed restrictions of not interfering in the writ jurisdiction and relegating the petitioner to the statutory remedy is subject to the exceptions carved out in Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1. The relevant paragraph is as under: –
“15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.”
8. In the case in hand a reasonable opportunity to defend the case was not granted to the petitioner. The request made for producing the additional material by 24.11.2023 was neither considered nor rejected. It would be relevant to quote paragraph no.5.6 of the counter filed by the respondent:-
“5.6 That the Respondent authorities, trusting the bona fides of the Petitioner, granted the Petitioner an opportunity to place additional material on record and/or make additional submissions, as had been sought by the Petitioner, and allowed the Petitioner time till 15.11.2023 for such purpose. However, it is pertinent to note that no such additional material and/or additional submissions were made by the Petitioner, even though the Respondent authorities waited for an additional period of 9 days subsequent to the aforementioned date of 15.11.2023, before passing the Impugned Order on 24.11.2023.”
9. It is the admitted case of the department that an additional time till 15.11.2023 was granted to place the additional material on record and to make further submissions. From perusal of the impugned order, it is evident that the request by email of the petitioner seeking extension of time till 24.11.2023 was not even noted. One of the grounds for passing the impugned order was failure of the petitioner to produce the relevant documents. The minimum that was expected from a quasi-judicial authority was at least to deal with the request for grant of further time and thereafter take an appropriate decision thereon.
10. The impugned order is violative of principles of natural justice and is set aside. The matter is remanded back to the respondent no.1 to decide afresh from the stage at which the proceedings stood on 15.11.2023.
11. In order to avoid any further complication, let the petitioner or its authorised representative appear in the office of the respondent no.1 on 02.12.2026 at 11.00 a.m. Needless to say the respondent no.1 shall proceed in accordance with law.
12. The petition is disposed of in the aforesaid terms.
13. Pending application is also disposed of.
