Case Law Details
SS Enterprises Vs Office of the Commissioner Central Tax Delhi West and Anr. (Delhi High Court)
Delhi High Court has ruled that SS Enterprises, a firm facing a penalty of over Rs. 36 lakh under the Goods and Services Tax (GST) regime, must pursue its challenge through the statutory appellate mechanism rather than a writ petition. The court’s order also provided clarity on the interpretation of Section 75(5) of the Central Goods and Service Tax (CGST) Act, 2017, stating that the provision limits the maximum number of adjournments for a hearing to three times and does not mandate that an assessee must be provided with three personal hearings.
The case involved SS Enterprises challenging an Order-in-Original dated January 31, 2025, passed by the Additional Commissioner of Central Tax, CGST Delhi West Commissionerate, which imposed the penalty. The penalty stemmed from allegations that SS Enterprises had received invoices without the underlying goods from two firms, reportedly linked to an individual named Ms. Aaarti Kapoor. Authorities alleged that this facilitated the availment of Input Tax Credit (ITC) totaling Rs. 172 crore through purportedly fake and fraudulent firms and goods-less invoices.
SS Enterprises approached the High Court primarily arguing that the notice for personal hearing was not properly served, alleging it was dispatched late, leaving them time only for the last scheduled hearing date. They also contended that they were not connected to Ms. Aaarti Kapoor and, crucially, that they were not provided with three personal hearings, which they believed Section 75(5) of the CGST Act entitled them to.
However, the High Court, upon perusal of the petitioner’s own writ petition, found that the claim of not receiving the hearing notice was contradicted by their admission that the notice was received on January 18, 2025, which was in advance of the scheduled personal hearing on January 21, 2025. The court noted that the petitioner had sufficient time to appear for the hearing on the last date but failed to do so.
Addressing the petitioner’s argument regarding the number of hearings, the court examined the language of Section 75(5) of the CGST Act. The provision states: “The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing: Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.”
Interpreting this section, the High Court clarified that Section 75(5) places a restriction on the maximum number of adjournments that can be granted to a person during proceedings, limiting them to three. The court explicitly stated that this provision does not imply or guarantee that an assessee is entitled to a minimum of three personal hearings. Since the hearing notice was received and the opportunity was not utilized by the petitioner, the court found no valid grievance against the department on this ground.
The respondents’ counsel highlighted that the impugned order was appealable under Section 107 of the CGST Act. Agreeing with this submission and finding the petitioner’s grounds for challenging the order through a writ petition unconvincing, the High Court directed SS Enterprises to file a formal appeal before the Appellate Authority under Section 107.
The court further directed the tax department to provide SS Enterprises with all the Relied Upon Documents (RUDs) within two weeks. Upon receiving these documents, the petitioner has been granted a period of 30 days to approach the Appellate Authority. The High Court ordered that if the appeal is filed within this stipulated timeframe after the receipt of the RUDs, the Appellate Authority shall not dismiss it on grounds of limitation but must adjudicate it on its merits.
Consequently, the writ petition filed by SS Enterprises was disposed of with these directions, and the pending application for stay was also closed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1.This hearing has been done through hybrid mode.
CM APPL. 25947/2025 (for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of.
W.P.(C) 5684/2025 & CM APPL. 25946/2025 (for stay)
3. The present petition has been filed by the Petitioner – SS Enterprises under Articles 226 and 227 of the Constitution of India, inter alia, assailing the Order-in-Original bearing no. 84/SPP/ADC/CGST/DSC/2024-25 dated 31st January, 2025 (hereinafter, ‘impugned order’) passed by the Respondent No.1 – Additional Commissioner of Central Tax, CGST Delhi West Commissionerate.
4. Vide the impugned order, a penalty to the tune of Rs. 36,05,299/- has been imposed upon the Petitioner.
5. The case of the Petitioner is that the hearing notice was not received by the Petitioner. Moreover, the Petitioner submits that it is not connected to Ms. Aaarti Kapoor.
6. A perusal of the impugned order would show that the Petitioner is alleged to have received the goods-less invoices from two firms, namely M/s. Shivaay Trading and Satyam Associates, which are firms stated to be belonging to Ms. Aaarti Kapoor. The total availment of Input Tax Credit (hereinafter, ‘ITC’) is alleged to be to the tune of Rs. 172 Crores through fake and fraudulent firms and goods-less invoices.
7. The allegation that the personal hearing notice was not received is belied by the Petitioner’s own averment in the writ petition, which reads as under:
“Because the notice for personal hearing was not properly issued and failed to adhere to the due process of law. The notice for personal hearing dated 09.01.2025, was dispatched on 17.01.2025 and was received by the Petitioner only on 18.01.2025, late in the evening. By the time the notice was received, the time granted for first two personal hearings i.e 13.01.2025 and 16.01.2025 had lapsed, leaving the Petitioner with only one final hearing date i.e. 21.01.2025, available for representation. This procedural lapse in serving the personal hearing notice to the Petitioner deprived the Petitioner’s ability to defend itself and deprived it of a fair and reasonable opportunity to present its case, thus rendering the entire process leading to issuance of Impugned Order as unfair.”
8. As per the above averment, the notice was in fact received, well in time for appearance in the personal hearing on 21st January 2025. Further submission on behalf of Ms. Shivani Sethi, ld. Counsel appearing for the Petitioner is that three personal hearings have not been given to the Petitioner. In fact, a perusal of Section 75(5) of the Central Goods and Service Tax Act, 2017 (hereinafter, ‘CGST Act’) would show that the said provision merely contemplates that the maximum adjournments shall be given for three times but does not in effect mean that three hearings have to be given. The relevant provision is set out below:
“(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.”
9.The personal hearing notice having been received by the Petitioner and the Petitioner having not availed of the hearing, cannot now be permitted to raise a grievance in respect thereof, against the Department.
10. Aakarsh Srivastava, ld. Sr. Standing Counsel for the Respondents submits that the impugned order is an appealable order.
11. Accordingly, let the Petitioner file an appeal in respect of impugned order under Section 107 of the CGST Act to the Appellate Authority.
12. With the appeal, the Petitioner is permitted to file any documents that they wish to place on record.
13. There is grievance that the Relied-upon documents (`RUDs’) are not with the Petitioner. It is accordingly directed that the Department shall make available to the Petitioner all the Relied Upon documents (hereinafter, ‘RUDs’) within two weeks on the following email address:-
14. Upon receiving the RUDs, the Petitioner is permitted to approach the Appellate Authority within 30 days. If the appeal is filed in the time period as specified above, the same shall not be dismissed on the ground of limitation and shall be adjudicated on merits.
15. The petition is disposed of in these terms. Pending application(s), if any, also stand disposed of.
Author Bio
