Case Law Details
Sun International Limited Vs Commissioner of Delhi Goods And Services Tax (Delhi High Court)
The writ petition challenges an Order-in-Original dated 17.08.2024 issued under Section 73 of the Delhi Goods and Services Tax Act, 2017 for the financial year 2019–2020. The order confirmed a tax demand of ₹2,20,76,630 arising from alleged incorrect declaration of tax liabilities in the petitioner’s annual return (Form GSTR-9), particularly due to excess and ineligible Input Tax Credit (ITC), including credits restricted under Section 17(5) of the Act.
The show cause notice dated 29.05.2024, which formed the basis of the demand, was uploaded on the GST portal. However, the petitioner contended that it did not receive any alert or intimation, and the notice did not appear in the “outstanding tax liability” section. As a result, the petitioner neither filed a reply nor participated in the personal hearing. It was argued that this amounted to a violation of the principles of natural justice, rendering the impugned order invalid.
After the petitioner failed to make payment within the stipulated time, recovery proceedings were initiated, including provisional attachment of the petitioner’s bank account under Section 83 through Form GST DRC-22 dated 16.01.2026.
To demonstrate bona fides, the petitioner referred to a subsequent show cause notice for financial year 2021–2022, where it had responded promptly, participated in the hearing, and succeeded in reducing the demand to nil. This was cited to show that the petitioner had a history of compliance when properly notified.
The petitioner sought an opportunity to submit a reply and participate in a fresh hearing, even offering to deposit the entire demand amount as a condition. On the other hand, the respondent argued that the petition was filed belatedly, and the petitioner should not benefit from its own inaction. It was also contended that disputed factual issues were involved, which are not suitable for adjudication in writ jurisdiction.
Upon examination, the court noted that the petitioner had not submitted any reply to the show cause notice and had not availed the opportunity of a personal hearing. However, the court emphasized that the right to be heard is an essential component of natural justice. At the same time, the court acknowledged that the petition was filed at a belated stage.
Balancing these considerations, the court set aside the impugned Order-in-Original. It allowed the petitioner to submit a reply to the show cause notice and attend a fresh hearing, subject to the condition that the entire demand amount be deposited with the respondent authority. The matter was remanded for de novo adjudication, with a direction to pass a reasoned order thereafter.
Regarding the provisional attachment of the bank account, the court held that since the original order had been set aside and the matter remanded, continuation of the attachment was not justified at this stage. Accordingly, the respondents were directed to lift the attachment forthwith.
The court clarified that its directions were limited to procedural aspects and did not amount to any determination on merits. All rights and contentions of both parties were kept open for consideration in the de novo proceedings.
Additionally, the court imposed costs of ₹2,50,000 on the petitioner, to be paid to specified associations of the Delhi High Court. The petitioner was directed to appear before the concerned authority on 30.04.2026 for further proceedings.
The petition was disposed of accordingly, along with all pending applications.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present writ petition assails the impugned Order in Original dated 17.08.2024 passed by Respondent No. 1, confirming the demand of 220,76,630 as levied in the show cause notice dated 29.05.2024 under Section 73 of the Delhi Goods and Services Tax Act, 2017, (hereinafter DGST Act) for the financial year 2019-2020.
2. The petitioner is a company incorporated under the Companies Act, 2013 and is duly registered as GSTIN 07AALCS3889D1ZY.
3. Respondent No. 1 issued a show cause notice dated 29.05.2024 under Section 73 of the DGST Act for the financial year 2019-2020 proposing a demand of 220,76,630 on account of incorrect declaration of tax liabilities in the Petitioner’s annual return in Form GSTR-9, particularly with respect to the availment of excess Input Tax Credit (hereinafter ITC). Furthermore, a portion of the credit availed by the Petitioner pertains to ineligible or blocked credits within the meaning of Section 17(5) of the DGST Act, including, inter alia, credit in respect of motor vehicles and conveyances, goods or services used for personal consumption, and such inward supplies which are expressly restricted under the statutory scheme.
4. The demand under Section 73 for the financial year 2019-2020 was confirmed vide impugned order in original dated 17.08.2024, whereby the petitioner was given time till 15.11.2024 to make the requisite payment, failing which recovery proceedings were initiated.
5. Since the petitioner failed to pay the outstanding dues, Respondent No. 1 initiated recovery proceedings by issuing Form GST DRC-22 dated 16.01.2026 and provisionally attached the petitioner’s bank account under Section 83.
6. Oberoi, learned counsel for the Petitioner submits that the show cause notice dated 29.05.2024 was merely uploaded on the GST portal and did not reflect in the “outstanding tax liability” section. It is contended that no alert or intimation was received either from the portal or from the Respondent authorities, as a consequence of which the Petitioner was unable to file a reply or participate in the personal hearing. It is thus urged that the impugned Order-in-Original stands vitiated for violation of the principles of natural justice.
7. In support of his submissions, and to demonstrate bona fides, learned counsel for the petitioner draws our attention to a subsequent show cause notice dated 30.06.2025 issued under Section 73 of the DGST Act for Financial Year 2021-2022, proposing a demand of 27,74,484 on account of wrongful availment of ITC. It is submitted that the Petitioner duly responded by way of reply dated 11.08.2025 and appeared for personal hearing, pursuant to which the demand was reduced to nil, thereby evidencing consistent and diligent compliance when show notice was received.
8. He further submits, on instructions, that without prejudice to his rights, subject to deposit of entire demand amount with Respondent No. 1, he should be allowed to submit his reply and attend personal hearing for a de-novo
9. Mohan, learned Senior Standing Counsel for the Respondent submits that the Petitioner has approached this Court belatedly and cannot be permitted to take advantage of its own inaction. It is further contended that the Petitioner failed to avail of the statutory opportunity to respond to the show cause notice, and that the present proceedings involve disputed questions of fact which are not amenable to adjudication in writ jurisdiction.
10. Perused the records.
11. Undisputedly, the petitioner has not submitted a reply to the show cause notice dated 29.05.2024, and did not get the opportunity for personal hearing. This court is of the considered opinion that the right of the petitioner to be heard is an inalienable right under the principle of natural justice. However, this court cannot also lose sight of the fact that the petitioner has filed the present writ petition at a belated stage.
12. Accordingly, the impugned order in original is set aside. The petitioner, subject to the deposit of the entire demand amount with Respondent No.1, is permitted to submit his reply to the show cause notice, attend the physical hearing and thereafter, a reasoned order be passed accordingly.
13. Insofar as the provisional attachment of the Petitioner’s bank account pursuant to Form GST DRC-22 dated 16.01.2026 is concerned, this Court notes that the said attachment was effected in furtherance of the recovery proceedings initiated under Section 83 of the DGST Act. In view of the fact that the impugned Order-in-Original dated 17.08.2024 has been set aside and the matter is being remanded for de novo adjudication, subject to the conditions imposed herein, the continuation of such attachment would not be warranted at this stage.
14. Accordingly, the Respondents are directed to forthwith lift the provisional attachment in respect of the Petitioner’s bank account, as detailed in the order dated 16.01.2026 issued in Form GST DRC-22.
15. It is, however, clarified that this direction is confined to the present procedural stage arising out of the remand and shall not be treated as a determination on merits, nor shall it prejudice the rights and contentions of either party in the de novo proceedings or in any action that may be taken in accordance with law thereafter.
16. Furthermore, costs of 250,000 is imposed on the petitioner with 225,000 paid to the Delhi High Court Bar Association (Account No. 15530110179338, IFSC: UCBA0001553, Bank Name: UCO Bank, Branch: Delhi High Court) and 225,000 paid to the Delhi High Court Clerk Association (Account No. 15530100006282, IFSC: UCBA0001553, Bank Name: UCO Bank, Branch: Delhi High Court).
17. The petitioner is directed to appear before the concerned respondent authorities on 30.04.2026 at 11 am. We make it clear that this court has not gone into the merits of the case, and all rights and remedies as permissible in law are kept open.
18. The petition is disposed of in these terms. All pending applications, if any, are also disposed of.
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