Sugandha Enterprises Vs Commissioner of DGST & Ors. (Delhi High Court)

In Sugandha Enterprises v. Commissioner of DGST & Ors. (Delhi High Court, 2025), the petitioner, Devender Kumar Singh, challenged a show cause notice (SCN) dated 23 May 2024 and a consequent order dated 30 July 2024 passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner also contested several Central and State GST notifications — Nos. 9/2023 and 56/2023 — issued under Section 168A of the CGST Act, which extended the limitation period for adjudicating tax proceedings for FY 2019–20.The petitioner argued that the order was passed ex parte without providing an opportunity to respond to the SCN, thereby violating the principles of natural justice. Furthermore, the petitioner questioned the validity of the impugned notifications on the grounds that they were not issued in accordance with the statutory requirement of prior recommendation from the GST Council under Section 168A of the CGST Act.The High Court noted that this case was part of a batch of petitions challenging similar GST notifications. In earlier proceedings (DJST Traders Pvt. Ltd. v. Union of India), the Delhi High Court had observed that the challenge primarily concerned whether the Central and State governments had lawfully exercised powers under Section 168A to extend the limitation for issuance of SCNs and adjudication orders. It was argued that while Notification No. 9/2023 had received prior recommendation from the GST Council, Notification No. 56/2023 was issued and later ratified retrospectively, raising questions of procedural irregularity.The Court referred to judicial developments across India concerning these notifications. The Allahabad High Court had upheld Notification No. 9/2023, while the Patna High Court upheld Notification No. 56/2023. In contrast, the Gauhati High Court quashed Notification No. 56/2023, holding it ultra vires. The Telangana High Court, while refraining from ruling on the vires, observed irregularities in the issuance of Notification No. 56/2023, leading to a Special Leave Petition (SLP No. 4240/2025 – M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors.) pending before the Supreme Court.The Supreme Court, in its interim order dated 21 February 2025, acknowledged the divergence in judicial opinion among various High Courts and agreed to examine whether time limits for adjudication under Section 73 could be extended through Section 168A notifications. Consequently, multiple High Courts, including Punjab & Haryana and Bombay, chose to defer final adjudication, directing that their respective cases be governed by the Supreme Court’s eventual ruling.In this context, the Delhi High Court reiterated that since the validity of the impugned notifications was already sub judice before the Supreme Court, it would refrain from ruling on their legality. However, the Court proceeded to address the petitioner’s grievance regarding procedural fairness in the adjudication process.On factual grounds, the petitioner submitted that no opportunity was given to respond to the SCN or to present a case before the authority. The Court examined the contents of the impugned order and noted that the taxpayer neither filed a reply in Form DRC-06 nor appeared for a personal hearing, despite multiple opportunities. The adjudicating authority, therefore, upheld the demand and issued DRC-07 in confirmation.The Delhi High Court held that the order suffered from procedural infirmity and violated the principles of natural justice. Even if opportunities were provided, the record did not show any effective communication ensuring the petitioner’s participation. The Court emphasized that an assessee must be given a meaningful opportunity to file a reply and be heard before final adjudication, particularly where substantial tax demands and penalties are involved.Accordingly, the impugned order dated 30 July 2024 was set aside. The Court granted the petitioner 30 days to submit a detailed reply to the SCN. Upon receipt of the reply, the adjudicating authority was directed to issue a notice for a personal hearing, ensuring communication through both mobile and email as specified in the order. The authority was instructed to consider the petitioner’s submissions and issue a fresh, reasoned order thereafter.Importantly, the Court clarified that any fresh order passed by the adjudicating authority would remain subject to the outcome of the Supreme Court’s decision in M/s HCC-SEW-MEIL-AAG JV. The writ petition was thus disposed of, along with pending applications, with no adjudication on the constitutional validity of the notifications themselves.The judgment reinforces the necessity of procedural fairness in GST adjudications under Section 73 of the CGST Act. It also illustrates the judiciary’s consistent approach in deferring to the Supreme Court where the vires of nationwide GST notifications are under consideration, thereby maintaining judicial discipline and avoiding conflicting interpretations across jurisdictions.By restoring the petitioner’s right to be heard and keeping the issue of notification validity open, the Delhi High Court balanced procedural justice with institutional prudence. The outcome underscores that taxpayers must receive an effective opportunity to respond to notices before adverse tax orders are finalized, in line with the fundamental principles of natural justice.