M/s Lokesh Sanitary Store v. Union of India & Anr.

Court: Delhi High Court
Case No.: W.P.(C) 755/2024 & CM APPL. 3299/2024
Date of Judgment: 23rd April, 2025
Category of Dispute: Validity of Notification & Opportunity of Hearing in SCN Adjudication
Relevant Sections: Section 73, Section 168A of CGST Act, 2017; CGST Rules relating to service of notices

Title:

Show Cause Notice Uploaded in “Additional Notices Tab” Held Invalid; Matter Remanded

Facts of the Case (Paras 2, 6–8)

1. The petitioner, M/s Lokesh Sanitary Store, challenged a show cause notice dated 24.09.2023 issued for FY 2017–18 and the consequent order dated 18.12.2023 under Section 73 CGST Act.

2. The petitioner argued that the SCN was uploaded only on the “Additional Notices Tab” of the GST portal, due to which it did not come to its knowledge, and hence, no reply or personal hearing was possible.

3. The petitioner also challenged Notification No. 9/2023-Central Tax dated 31.03.2023 on grounds of lack of proper GST Council recommendation under Section 168A CGST Act.

4. Several other writ petitions across India have challenged the same notifications. Conflicting High Court rulings exist, and the issue is now pending before the Supreme Court in SLP No. 4240/2025.

Questions in Consideration (Paras 4, 5, 6)

1. Whether the impugned SCN and adjudication order passed without effective service and hearing are sustainable under law?

2. Whether the validity of Notification No. 9/2023-Central Tax can be decided by the High Court when the matter is already sub judice before the Supreme Court?

Observations of the Court (Paras 5–11)

1. The validity of the impugned notifications is pending before the Supreme Court, and hence, the Delhi High Court refrained from ruling on it.

2. It noted that in earlier decisions (e.g., Neelgiri Machinery v. Commissioner DGST, 2024:DHC), orders were set aside where SCNs were only visible in the “Additional Notices Tab,” depriving parties of a fair opportunity to respond.

3. The Court emphasized principles of natural justice—tax demands cannot be sustained when passed ex parte without adequate service of notice and personal hearing.

4. The portal issue was rectified only after January 2024, while the SCN in this case was of September 2023, thereby prejudicing the petitioner.

Judgment of the Court (Paras 8–12)

1. The impugned order dated 18.12.2023 was set aside.

2. The petitioner was directed to file a reply within 30 days, and the Department was instructed to provide a personal hearing with notices served not only on the portal but also via email and mobile.

3. The adjudicating authority shall pass a fresh order on merits after considering submissions.

4. The challenge to Notification No. 9/2023-Central Tax is kept open, subject to the outcome of the Supreme Court’s decision in SLP No. 4240/2025.

Between Fine Lines (Simplified 5-Line Summary):

• SCN uploaded only in “Additional Notices Tab” without proper intimation is invalid.

• Orders passed ex parte without hearing violate natural justice.

• Court remanded matter back for fresh adjudication with proper notice and hearing.

• Validity of Notification No. 9/2023 is left to Supreme Court’s decision.

• Relief granted only on procedural grounds, not on substantive tax liability.

Summary of Referred Cases

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