Case Law Details
Aays Exim Vs Union of India (Delhi High Court)
Delhi High Court has directed M/s Aays Exim to pursue its appellate remedy against a Show Cause Notice dated December 5, 2023, and a subsequent order dated March 10, 2024, issued under Section 73 of the Delhi Goods & Service Tax Act, 2017. The petitioner had also challenged the vires (legal validity) of Notification No. 09/2023-State Tax dated June 22, 2023, which extends tax deadlines.
Background of the Challenge to Notifications:
The challenge to Notification No. 09/2023-State Tax is part of a larger batch of petitions being heard by the Delhi High Court, with the lead matter being P.(C) 16499/2023 titled DJST Traders Pvt. Ltd. vs. Union of India and Ors. These petitions broadly contest the validity of various notifications (including Notification No. 56/2023-Central Tax and 09/2023-Central Tax) on the ground that the proper procedure, specifically the prior recommendation of the GST Council as mandated by Section 168A of the CGST Act, 2017, was not followed before their issuance. Concerns were raised that ratification, in some instances, occurred after the notification, and that some notifications incorrectly stated they were based on GST Council recommendations.
Judicial Precedents and Divergent Views:
The validity of Notification Nos. 09 and 56 of 2023 (Central Tax) has been subject to varied interpretations by different High Courts:
- The Allahabad High Courthas upheld the validity of Notification No. 09.
- The Patna High Courthas upheld the validity of Notification No. 56.
- Conversely, the Guwahati High Courthas quashed Notification No. 56 of 2023 (Central Tax).
- The Telangana High Court, without directly delving into the vires, made observations suggesting the invalidity of Notification No. 56 of 2023 (Central Tax). This judgment is currently under consideration by the Supreme Court of India in L.P No 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.
The Supreme Court, in its order dated February 21, 2025, in the HCC-SEW-MEIL-AAG JV case, acknowledged the “cleavage of opinion amongst different High Courts” regarding whether the time limits for adjudication of show cause notices and passing orders under Section 73 of the GST Act could have been extended by issuing these notifications under Section 168A. The Supreme Court has issued notice on the SLP and the prayer for interim relief.
The Punjab and Haryana High Court, in an order dated March 12, 2025, disposed of similar writ petitions, stating that all such cases would be governed by the Supreme Court’s judgment in S.L.P No 4240/2025, thereby exercising judicial discipline and refraining from expressing its own opinion on the vires of Section 168A or the notifications. Interim orders in those cases were continued, pending the Supreme Court’s final adjudication.
Delhi High Court’s Approach:
The Delhi High Court noted that while the validity of central notifications (56/2023-CT and 09/2023-CT) is pending before the Supreme Court, challenges to parallel State Notifications are being retained for its own consideration, with W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India & Ors. as the lead matter for state notifications. The court specified that Aays Exim’s challenge to the state notification would be subject to the outcome of both the Supreme Court’s and the Delhi High Court’s decisions in the respective lead matters.
Aays Exim’s Factual Position and Court’s Decision:
Unlike some other petitioners in the batch who claimed they were unable to file replies or avail personal hearings, Aays Exim’s factual position was different. The court noted that Aays Exim had duly replied to the Show Cause Notice on February 20, 2024. Furthermore, the petitioner had been granted repeated personal hearings on January 15, 2024, and February 22, 2024, and had attended the second hearing based on which the impugned order of March 10, 2024, was passed.
Considering these circumstances, the Delhi High Court found that the impugned order did not warrant direct interference via a writ petition. The court therefore directed Aays Exim to avail its statutory appellate remedy under Section 107 of the Delhi Goods and Services Tax Act. The court also provided a concession: if the appeal is filed within two months along with the pre-deposit, it shall not be dismissed on the grounds of limitation and must be heard on its merits.
The court reiterated that the issue regarding the validity of the impugned notification remains open, and any order passed by the appellate authority will be subject to the outcome of the decisions from both the Supreme Court and the Delhi High Court on the validity of the extension notifications.
Finally, the court ordered that access to the GST Portal, if not already available, should be ensured for the petitioner to enable access to notices and related documents. The petition was disposed of with these terms, and any pending applications were also closed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner under Articles 226 and 227 of the Constitution of India inter alia challenging the impugned Show Cause Notice dated 5thDecember, 2023 issued for the year 2018-19 and impugned order dated 10th March, 2024 issued by the Respondent No. 4-Sales Tax Officer, Class II/AVATO, ward 77, Zone 7, Delhi under section 73 of the Delhi Goods & Service Tax Act, 2017 (hereinafter ‘the DGST Act’).
3. The petition also challenges the vires of Notification No. 09/2023-State Tax dated 22nd June, 2023 (hereinafter ‘impugned notification’).
4. The impugned notification was under consideration before this Court in a batch of matters with the lead matter being W.P.(C) 16499/2023 titled ‘DJST Traders Pvt. Ltd. vs. Union of India and Ors.’. In the said batch of petitions, on 22nd April, 2025, the parties were heard at length qua the validity of the impugned notification and accordingly, the following order was passed:
“4. Submissions have been heard in part. The broad challenge to both sets of Notifications is on the ground that the proper procedure was not followed prior to the issuance of the same. In terms of Section 168A, prior recommendation of the GST Council is essential for extending deadlines. In respect of Notification no.9, the recommendation was made prior to the issuance of the same. However, insofar as Notification No. 56/2023 (Central Tax) the challenge is that the extension was granted contrary to the mandate under Section 168A of the Central Goods and Services Tax Act, 2017 and ratification was given subsequent to the issuance of the notification. The notification incorrectly states that it was on the recommendation of the GST Council. Insofar as the Notification No. 56 of 2023 (State Tax) is concerned, the challenge is to the effect that the same was issued on 11th July, 2024 after the expiry of the limitation in terms of the Notification No.13 of 2022 (State Tax).
5. In fact, Notification Nos. 09 and 56 of 2023 (Central Tax) were challenged before various other High Courts. The Allahabad Court has upheld the validity of Notification no.9. The Patna High Court has upheld the validity of Notification no.56. Whereas, the Guwahati High Court has quashed Notification No. 56 of 2023 (Central Tax).
6. The Telangana High Court while not delving into the vires of the assailed notifications, made certain observations in respect of invalidity of Notification No. 56 of 2023 (Central Tax). This judgment of the Telangana High Court is now presently under consideration by the Supreme Court in S.L.P No 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. The Supreme Court vide order dated 21st February, 2025, passed the following order in the said case:
“1. The subject matter of challenge before the High Court was to the legality, validity and propriety of the Notification No.13/2022 dated 5-7-2022 & Notification Nos.9 and 56 of 2023 dated 31-3-2023 & 8-12-2023 respectively.
2. However, in the present petition, we are concerned with Notification Nos.9 & 56/2023 dated 31-3-2023 respectively.
3. These Notifications have been issued in the purported exercise of power under Section 168 (A) of the Central Goods and Services Tax Act. 2017 (for short, the “GST Act”).
4. We have heard Dr. S. Muralidhar, the learned Senior counsel appearing for the petitioner.
5. The issue thatfalls for the consideration of this Court is whether the time limit for adjudication of show cause notice and passing order under Section 73 of the GST Act and SGST Act (Telangana GST Act) for financial year 2019-2020 could have been extended by issuing the Notifications in question under Section 168-A of the GST Act.
6. There are many other issues also arising for consideration in this matter.
7. Dr. Muralidhar pointed out that there is a cleavage of opinion amongst different High Courts of the country. 8. Issue notice on the SLP as also on the prayer for interim relief, returnable on 7-3-2025.”
7. In the meantime, the challenges were also pending before the Bombay High Court and the Punjab and Haryana High Court. In the Punjab and Haryana High Court vide order dated 12th March, 2025, all the writ petitions have been disposed of in terms of the interim orders passed therein. The operative portion of the said order reads as under:
“65. Almost all the issues, which have been raised before us in these present connected cases and have been noticed hereinabove, are the subject matter of the Hon’ble Supreme Court in the aforesaid SLP.
66. Keeping in view thejudicial discipline, we refrain from giving our opinion with respect to the vires ofSection 168¬A of the Act as well as the notifications issued in purported exercise of power under Section 168-A of the Act which have been challenged, and we direct that all these present connected cases shall be governed by the judgment passed by the Hon’ble Supreme Court and the decision thereto shall be binding on these cases too.
67. Since the matter is pending before the Hon’ble Supreme Court, the interim order passed in the present cases, would continue to operate and would be governed by the final adjudication by the Supreme Court on the issues in the aforesaid SLP-4240-2025.
68. In view of the aforesaid, all these connected cases are disposed of accordingly along with pending applications, if any.”
8. The Court has heard ld. Counsels for the parties for a substantial period today. A perusal of the above would show that various High Courts have taken a view and the matter is squarely now pending before the Supreme Court.
9. Apart from the challenge to the notifications itself, various counsels submit that even if the same are upheld, they would stillpray for relief for the parties as the Petitioners have been unable to file replies due to several reasons and were unable to avail of personal hearings in most cases. In effect therefore in most cases the adjudication orders are passed ex-parte. Huge demands have been raised and even penalties have been imposed.
10. Broadly, there are six categories of cases which are pending before this Court. While the issue concerning the validity of the impugned notifications is presently under consideration before the Supreme Court, this Court is of the prima facie view that, depending upon the categories of petitions, orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases, proceedings including appellate remedies may be permitted to be pursued by the Petitioners, without delving into the question of the validity of the said notifications at this stage.
11. The said categories and proposed reliefs have been broadly put to the parties today. They may seek instructions and revert by tomorrow i.e., 23rd April, 2025.”
5. Subsequently, this Court, having noted that the validity of the central notifications—Notification Nos. 56/2023-CT and 09/2023-CT—is presently under consideration before the Hon’ble Supreme Court in S.L.P. No. 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors., had disposed of matters wherein challenge was limited to the central notifications, after addressing other factual issues raised in the respective petitions, with a direction that such matters would remain subject to the outcome of the proceedings before the Supreme Court. However, in cases where the challenge is to the parallel State Notifications, the same have been retained for consideration by this Court. The lead matter in the said batch is W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India & Ors. Considering the fact that the present petition challenges state notification, the same shall be subject to the outcome of the decisions of the Supreme Court and this Court in the aforementioned matters.
6. Further, on facts, it is noticed that the Show Cause Notice was duly replied to by the Petitioner on 20thFebruary, 2024. Repeated personal hearings were granted to the Petitioner on 15th January, 2024 & 22nd February, 2024. The Petitioner had also attended second hearing based on which the impugned order has been passed on 10th March, 2024.
7. Considering these circumstances the Court is of the opinion that the impugned order dated 10th March, 2024 does not warrant interference. Accordingly the petition is disposed of with the liberty to the Petitioner to avail of its appellate remedy under Section 107 of the DGST Act. If the appeal is filed within two months along with pre-deposit, the appeal shall not be dismissed on the ground of limitation and shall be heard on merits.
8. However, it is made clear that the issue in respect of the validity of the impugned notification is left open and the order of the appellate authority shall be subject to the outcome of the decision of the Supreme Court and this Court.
9. Access to the GST Portal, if not already available, shall be ensured to be provided to the Petitioner to enable access to the notices and related documents.
10. The petition is disposed of in the above terms. Pending applications, if any, shall also be disposed of.
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