High Court Sets Aside GST Demand for Breach of Natural Justice; Fresh Hearing Ordered

Wavelinx Technologies Private Limited filed a writ petition before the Delhi High Court challenging a Show Cause Notice dated 29 May 2024 and the consequent adjudication order dated 23 August 2024 passed by the Sales Tax Officer, Delhi. The impugned order raised a GST demand of Rs. 86,44,927 for the tax period April 2019 to March 2020.

The petitioner also questioned the validity of Notification No. 9/2023 and Notification No. 56/2023 issued under the CGST Act, which extended limitation periods for adjudication.

Main Issue: Whether the GST adjudication order passed without the assessee filing a reply to the show cause notice and without effective hearing could be sustained, and whether the matter required remand for fresh adjudication.

HC Held: The High Court held that the impugned order had been passed without granting the petitioner a proper opportunity to contest the allegations on the merits. The Court observed that principles of natural justice require that an assessee be given a meaningful opportunity to file a reply to the SCN and be heard before any adverse order is passed.

Therefore, the impugned adjudication order dated 23 August 2024 was set aside. The petitioner was granted time up to 15 January 2026 to file its reply to the show cause notice. The adjudicating authority was directed to thereafter issue a notice of personal hearing, communicate the same to the petitioner, and pass a fresh order after duly considering the reply and submissions.

The Court clarified that the question relating to the validity of Notification Nos. 9/2023 and 56/2023 was left open and any fresh order passed would remain subject to the outcome of the pending proceedings before the Supreme Court.

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