High Court Nullifies Tax Order Over Defective SCN; Case Tied to Pending Supreme Court Review

The case has been filed by a company named RBC Financial Services Private Limited against the Union of India and Others in the Delhi High Court. The assessee challenged an order dated May 30, 2024, passed by the Sales Tax Officer, Class II/AVATO, Ward 8, Zone 2, Delhi, for the financial year 2019-20, raising a demand of Rs. 1.09 lakh, with tax, interest and penalty of Rs. 44,114, Rs. 35,290 and Rs. 30,00,0, respectively.

The company also challenged four notifications: Notification No. 9/2023-Central Tax dated March 31, 2023; Notification No. 56/2023-Central Tax dated December 28, 2023; Notification No. 09/202-State Tax dated June 22, 2023; and Notification No. 56/2023-State Tax dated July 11, 2024. These notifications have already been questioned in many other High Courts and are currently under review by the Supreme Court.

The same notifications were also challenged in a case (W.P.(C) No.16499/2023) related to the same issue titled DJST Traders Private Limited v. Union of India & Ors. Cases in which the aforesaid notifications are challenged are either remanded back to the concerned authorities or resolved by directing the parties to use their available appeal options, depending on the specific facts of each case. The final decision in all these cases will depend on the Supreme Court’s decision in respect of the validity of the Notification No. 56/2023-Central Tax in S.L.P. No. 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.

However, in cases where the challenge is against similar notifications issued by the State, some matters have been kept by this Court to be decided here. The main case in this group is W.P.(C) 9214/2024, called Engineers India Limited v. Union of India & Others.

In the present case, the company argued that it was never aware of the Show Cause Notice (SCN) because its accountant did not inform them. They also said that the SCN and the final order did not give any reasons for raising the tax demand.

When the Court examined the SCN and final order, it found that both of them were issued without proper reasoning. The order only mentions that the company did not respond. Because both the SCN and the order had no proper justification, the Court set aside the impugned order.

The court has directed the company to appear before the GST Department on December 15, 2025, and the department has also been directed to this time give the company a fair chance to respond, appear for the personal hearing and an opportunity to submit a written reply. The GST officer must then pass a fresh, reasoned order after considering the company’s reply.

The Court clarified that the final outcome will still depend on the Supreme Court’s decision about the validity of certain GST notifications. The GST Portal must also be opened for the petitioner within a week so they can upload their reply and access documents.