Case Law Details
Grilled Roti Vs Commissioner of Delhi Goods and Services Tax (Delhi High Court)
Delhi High Court has set aside a show cause notice and a subsequent order issued against M/s Grilled Roti for the Financial Year 2017-18. The petitioner, through its proprietor Mr. Atul Jain, had challenged both the substantive order and the vires (legal validity) of Notification No. 9/2023-Central Tax dated March 31, 2023, and Notification No. 9/2023-State Tax dated June 22, 2023.
Challenge to Notification Validity
The core legal challenge in this and numerous other petitions before the Delhi High Court revolves around the validity of notifications extending various GST deadlines. These notifications, issued under Section 168A of the Central Goods and Services Tax Act, 2017 (CGST Act), are being contested primarily on the ground that the requisite prior recommendation of the GST Council was not obtained, or that ratification occurred post-issuance. The lead case in this batch of petitions is P.(C) 16499/2023 titled DJST Traders Pvt. Ltd. vs. Union of India and Ors.
Judicial Precedents and Divergent High Court Views:
The validity of these notifications has been a point of contention across various High Courts:
- Allahabad High Courthas upheld the validity of Notification No. 9.
- 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, while not explicitly ruling on the vires, made observations suggesting the invalidity of Notification No. 56 of 2023 (Central Tax). This judgment is presently under consideration by the Supreme Court 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” among different High Courts regarding the extension of time limits for adjudication under Section 73 of the GST Act through these notifications. The Supreme Court has issued notice on the SLP, indicating its intent to provide a definitive ruling.
The Punjab and Haryana High Court, in its order dated March 12, 2025, chose to exercise “judicial discipline” and refrained from offering an opinion on the vires of Section 168A and the challenged notifications. It directed that all related writ petitions would be governed by the Supreme Court’s judgment in S.L.P No 4240/2025, and interim orders would continue to operate until that final adjudication.
Delhi High Court’s Decision in Grilled Roti’s Case:
The Delhi High Court, while acknowledging the broader challenge to the notifications, decided to address the factual specifics of Grilled Roti’s petition. The court noted that in cases where the challenge is to central notifications, it had disposed of matters subject to the Supreme Court’s outcome. However, challenges to parallel State Notifications are being retained for its own consideration, with P.(C) 9214/2024 titled Engineers India Limited v. Union of India & Ors. being the lead matter for state-level notifications. The court clarified that the present petition’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 aforementioned matters.
On the factual front, Grilled Roti contended that the show cause notice dated September 25, 2023, and the subsequent order dated December 22, 2023, were issued after its GST registration had been retrospectively cancelled from July 1, 2017, via an order dated December 23, 2021. This cancellation, the petitioner argued, resulted in a lack of access to the GST portal, preventing them from accessing forms and documents relied upon in the show cause notice. Despite this, the petitioner claims to have filed a reply on October 28, 2023, and an application seeking document copies on October 30, 2023.
The impugned order, however, presented contradictory remarks, first stating that no reply had been filed and then observing that the reply was “not satisfactory.”
The Delhi High Court found clear evidence of “miscommunication” due to the petitioner’s lack of GST portal access when the show cause notice was issued. Consequently, the court set aside the impugned order dated December 22, 2023.
The court directed that:
- The petitioner be granted access to the GST portal for a period of at least two months.
- Grilled Roti be given time until July 10, 2025, to file a fresh reply to the show cause notice.
- Upon receipt of the reply, the Adjudicating Authority shall issue a notice for a personal hearing, communicating it to the petitioner via the provided email address (Rahulgupta219A@gmail.com) and mobile number (9711953429).
- The Adjudicating Authority must duly consider the fresh reply and the submissions made during the personal hearing before passing a new order.
Importantly, the court reiterated that the issue concerning the validity of the impugned notifications remains open. Any subsequent order passed by the Adjudicating Authority will be subject to the final decisions of the Supreme Court in M/s HCC-SEW-MEIL-AAG JV and the Delhi High Court in Engineers India Limited.
All rights and remedies of the parties were left open, and the court ensured portal access for the petitioner to upload the reply and access relevant documents. The writ petition and all pending applications were disposed of in these terms.
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 – M/s Grilled Roti through its proprietor Mr. Atul Jain under Article 226 of the Constitution of India challenging the show cause notice dated 25th September, 2023 (hereinafter, ‘the SCN’) issued by the Department of Trade and Taxes, GNCTD, pertaining to the Financial Year 2017-18, as also the consequent order dated 22nd December, 2023 passed by the office of Sales Tax Officer Class II/ AVATO (hereinafter, ‘the impugned order’).
3. The petition also challenges the vires of Notification No. 9/2023-Central Tax dated 31st March, 2023 as also the Notification No. 9/2023-State Tax dated 22nd June, 2023 (hereinafter ‘impugned notifications’).
4. The validity of the impugned notifications was under consideration before this Court in a batch of petitions with the lead petition 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 notifications 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 of2023 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 ofpower 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 that falls 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. 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 the judicial discipline, we refrain from giving our opinion with respect to the vires of Section 168-A of the Act as well as the notifications issued in purported exercise ofpower 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 still pray 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 ofpetitions, 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. Thereafter, on 23rd April, 2025, this Court, having noted that the validity of the impugned notifications is under consideration before the Supreme Court, had disposed of several matters in the said batch of petitions after addressing other factual issues raised in the respective petitions. Additionally, while disposing of the said petitions, this Court clearly observed that the validity of the impugned notifications therein shall be subject to the outcome of the proceedings before 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.
6. 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.
7. In the present case, the submission of the Petitioner, on facts, is that a demand is sought to be raised upon the Petitioner vide SCN dated 25th September, 2023 after suspension of the GST registration of the Petitioner which was carried out through order of cancellation of registration dated 23rd December, 2021 and was given retrospective effect from 1st July, 2017.
8. It is the case of the Petitioner that since their GST Registration stood cancelled, they did not have any access to the GST portal or to the forms etc. which were relied upon in the SCN. Upon receiving the knowledge of the SCN, the Petitioner also filed a reply dated 28th October, 2023, explaining their above stated position.
9. Further, an application dated 30th October, 2023 was also filed on behalf of the Petitioner seeking copies of all the documents. The impugned order, on the one hand records that no reply has been filed and in the same very order the Officer also observes that the reply is not satisfactory. The said order reads as under:
“Whereas, SCN/ DRC-1 [see rule 100(2) & 142(1)(a)] was issued to the taxpayer under Section 73 of CGST / DGST Act & Rules, 2017;
And whereas, it is noticed that the Taxpayer has not replied to the show cause notice points and no evidence is produced against DRC-01.Further the taxpayer has requested to provide GSTR-1,GSTR-3B and GSTR- 2A. The same request has been forwarded to EDP Branch. Further the reply filed by the taxpayer is not satisfactory.
And whereas, further as per section 73(7) notice of tax and interest is to be given while section 73(9) prescribed for imposition of penalty equivalent to 10% of tax or Rs. 10000/- whichever is higher. The penalty is consequently and mandatory as per Act. As such the registered person is liable to pay penalty equivalent to 10% of tax along with tax amount in each head already conveyed through SCN/ DRC-01.
In view of aforesaid circumstances, the undersigned is left with no other option left but to create demand in accordance with the provisions of CGST / DGST Act & Rules, 2017. The said tax, interest and penalty is required to be deposited within 90 days of issuance of this notice.”
10. Clearly, there has been a miscommunication in this matter as the Petitioner did not have access to the GST portal at the time when the SCN was issued. The Petitioner shall, accordingly, be given access to the portal for a period of at least two months.
11. The impugned order is set aside. The Petitioner is granted time till 10th July 2025, to file the reply to SCN. Upon filing of the reply, the Adjudicating Authority shall issue a notice for personal hearing to the Petitioner. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:
Email address: Rahulgupta219A@gmail.com
Mobile No.: 9711953429
12. The reply filed by the Petitioner to the SCN along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh order with respect to the SCN shall be passed accordingly.
13. However, it is made clear that the issue in respect of the validity of the impugned notifications is left open. Any order passed by the Adjudicating Authority shall be subject to the outcome of the decision of 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. and of this Court in W.P.(C) 9214/2024 titled Engineers India Limited v. Union of India &Ors.
14. All rights and remedies of the parties are left open. Access to the GST Portal, shall be provided to the Petitioner to enable uploading of the reply as also access to the notices and related documents.
15. The present writ petition is disposed of in above terms. All the pending applications, if any, are also disposed of.