Case Law Details
Rau S IAS Study Circle Vs Goods And Service Tax GSTO 41 Delhi Department Trade Taxes Government of NCT Of Delhi & Anr. (Delhi High Court)
Delhi High Court has provided a significant reprieve to Rau S IAS Study Circle, a civil services examination coaching institute, by setting aside an ex-parte order and a show cause notice (SCN) issued by the Goods and Service Tax (GST) authorities. The court’s decision, delivered through a hybrid hearing, allows the petitioner a fresh opportunity to present its case, while explicitly deferring the broader legal challenge to the validity of certain GST notifications to the Supreme Court.
The petition filed by Rau S IAS Study Circle specifically challenged an SCN dated May 21, 2024, and a subsequent order dated August 22, 2024. Crucially, the institute also contested the validity of several notifications: Notification No. 56/2023-Central Tax dated December 28, 2023, Notification No. 09/2023-Central Tax dated March 31, 2023, Notification No. 09/2023-State Tax dated June 22, 2023, and Notification No. 56/2023-State Tax dated July 11, 2024. These notifications collectively pertain to extensions of various deadlines under the GST regime.
The challenge to these notifications is not isolated to this case. The Delhi High Court noted that the validity of these very notifications was under consideration in a batch of petitions, with the lead case being DJST Traders Pvt. Ltd. vs. Union of India and Ors. (W.P.(C) 16499/2023). The broad contention against these notifications centers on the alleged failure to follow proper procedure, particularly concerning Section 168A of the Central Goods and Services Tax Act, 2017. This section mandates a prior recommendation from the GST Council for extending deadlines.
Petitioners in various High Courts have argued that while Notification No. 09/2023 might have had a prior recommendation, Notification No. 56/2023 (Central Tax) was issued contrary to Section 168A’s mandate, with ratification purportedly given only after its issuance. Furthermore, Notification No. 56/2023 (State Tax) faced a specific challenge for being issued on July 11, 2024, allegedly after the expiry of the limitation period set by an earlier notification.
The legal landscape surrounding these notifications is complex, marked by a divergence of opinions among different High Courts across India:
- The Allahabad High Court has upheld the validity of Notification No. 09/2023.
- The Patna High Court has upheld the validity of Notification No. 56/2023.
- Conversely, the Guwahati High Court has quashed Notification No. 56/2023 (Central Tax).
- The Telangana High Court, while not delving into the vires (legal authority) of the notifications, made observations regarding the invalidity of Notification No. 56/2023 (Central Tax). This specific judgment from the Telangana High Court is currently under scrutiny by the Supreme Court.
The Supreme Court’s involvement stems from a Special Leave Petition (SLP) filed by M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. (SLP No. 4240/2025). In an order dated February 21, 2025, the Supreme Court acknowledged the “cleavage of opinion amongst different High Courts” and decided to consider the critical issue of “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.”
Adding to this judicial backdrop, the Punjab and Haryana High Court, in its order dated March 12, 2025, disposed of similar writ petitions. It exercised judicial discipline, refraining from offering an opinion on the vires of Section 168A or the challenged notifications, directing that all connected cases would be governed by the Supreme Court’s eventual judgment in SLP-4240-2025. Interim orders in those cases were also directed to continue until the Supreme Court’s final adjudication.
In the specific case of Rau S IAS Study Circle, the institute submitted that it could not access the impugned SCN and a reminder notice, nor file a reply, due to a series of “tragic incidents” on July 27, 2024, which included the arrest and subsequent bail of its CEO. This factual situation led to the adjudication order being passed ex-parte against the institute.
Considering these unique factual circumstances, the Delhi High Court decided to set aside the impugned order. The court has directed that Rau S IAS Study Circle be given an opportunity to file a reply to the SCN by August 31, 2025. To facilitate this, the petitioner’s online portal is to be enabled within one week to allow access to notices and related documents, and a personal hearing notice will be communicated via the provided email ID and mobile number. After considering the reply and submissions, the show cause notice is to be adjudicated in accordance with the law.
Crucially, the Delhi High Court explicitly clarified that its decision on this specific petition does not resolve the larger question of the validity of the impugned notifications. That issue remains “left open” and any order subsequently passed by the Adjudicating Authority in the institute’s case will be “subject to the outcome” of the Supreme Court’s decision in M/s HCC-SEW-MEIL-AAG JV (SLP No. 4240/2025) and the Delhi High Court’s own decision in Engineers India Limited v. Union of India & Ors. (W.P.(C) 9214/2024), which is the lead matter concerning parallel State Notifications.
By disposing of the writ petition with these directions, the Delhi High Court has ensured that the coaching institute receives a fair opportunity to present its defense, acknowledging the exceptional circumstances it faced. Simultaneously, the court has maintained judicial propriety by allowing the Supreme Court to definitively rule on the contentious issue of the validity of the GST extension notifications, which has created a split among various High Courts. All rights and remedies of the parties involved remain open for future legal recourse.
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 challenging the show cause notice dated 21stMay, 2024 (hereinafter, ‘the impugned SCN’), as also the consequent order dated 22nd August, 2024 (hereinafter, ‘the impugned order’).
3. Further, the petition also challenges Notification No.56/2023-Central Tax dated 28thDecember, 2023 and Notification No.09/2023-Central Tax dated 31st March, 2023 as also Notification No. 09/2023-State Tax dated 22nd June, 2023 and Notification No. 56/2023-State Tax dated 11th July, 2024 (hereinafter collectively ‘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 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 of2023 (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 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 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 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 primafacie 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. 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 Institute, on facts, is that the Petitioner Institute is a civil services examination coaching institute. It is submitted that the impugned SCN, as also a reminder notice dated 22nd August, 2024, was issued upon the Petitioner, however, the same was not accessed by the Petitioner due to various tragic incidents that took place on 27thJuly, 2024. The CEO of the Petitioner Institute was also arrested and now has been released on bail. Accordingly, it is submitted that the Petitioner Institute was prevented from filing the reply to the impugned SCN.
8. Considering the factual situation, the impugned order is set aside. The Petitioner shall be given an opportunity to file a reply by 31stAugust 2025, to the impugned SCN. For the said purpose, the Petitioner’s portal shall be enabled within one week, to file the reply as also access the notices and related documents. The personal hearing notice shall be communicated to the Petitioner on the following mobile no. and e-mail address:
Email ID: arifahmedkhan26@gmail.com
Mobile: Mob. No. 7678676654
9. After considering the reply and the submissions, the show cause notice shall be adjudicated in accordance with law.
10. 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.
11. All rights and remedies of the parties are left open.
12. The present writ petition is disposed of in above terms. All pending applications, if any, are also disposed of.
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