Delhi HC Quashes GST Demand Order Where
Show Cause Notice Was Not Properly Served: Vijay Traders Case
M/s Vijay Traders v. Sales Tax Officer Class II AVATO
Ward 47 & Another
W.P.(C) 4081/2025 | Order Dated: 01 April 2025 | High
Court of Delhi
Summary of the Case
The Delhi High Court in a significant decision
protected taxpayer rights under the GST regime by setting aside a demand order
issued against M/s Vijay Traders for FY 2017–18, citing improper
service of the Show Cause Notice (SCN). The SCN had been uploaded under the
“Additional Notices” tab of the GST portal, which the petitioner argued
was not easily accessible or visible, causing it to miss the notice and fail to
reply.
The Court, aligning with its earlier rulings in Kamla
Vohra and ACE Cardiopathy Solutions, held that uploading SCNs only
under non-primary tabs does not constitute sufficient service under Section
169 of the CGST Act. The case was remanded back for fresh
adjudication, giving the petitioner an opportunity to respond to the SCN and be
heard.
Procedural History and Relief Sought
Petitioner’s Pleas:
M/s Vijay Traders filed a writ petition under Article
226 of the Constitution, praying for:
- Quashing DRC-01 dated 23.09.2023 (SCN for FY 2017–18);
- Quashing DRC-07 dated 22.12.2023 (Order and Summary of Demand for FY 2017–18);
- Alternatively, direction to provide an opportunity to respond to
the SCN and participate in a personal hearing;
- Allow statutory appeal under Section 107 of CGST Act, if
needed, after condonation of delay.
Factual Matrix
1.
DRC-01 Issued
(SCN): On 23 September 2023,
the GST Department issued an SCN alleging tax irregularities for FY 2017–18.
2.
No Response
Filed: The petitioner did not
respond, allegedly due to non-receipt of proper intimation regarding the
SCN.
3.
SCN Placement
on Portal:
o
The SCN was
uploaded under ‘Additional Notices’ tab, not under the primary ‘Notices’
tab where taxpayers usually check for updates.
o
Petitioner argued
that such placement was not readily visible and thus escaped notice.
4.
DRC-07 and
Order Issued: On 22
December 2023, a final order and summary of demand (DRC-07) were issued ex
parte, without hearing the petitioner.
Legal Issues
1.
Does
uploading an SCN under ‘Additional Notices’ tab constitute valid service under
Section 169 of the CGST Act?
2.
Whether
principles of natural justice are violated if the taxpayer is not given a
proper opportunity to respond and be heard?
3.
Whether the
final order and demand can stand when the SCN is claimed to be improperly
served?
Statutory Provision Involved
Section 169 of the CGST Act – Service of Notice
This provision prescribes that notices must be:
- Delivered by hand;
- Sent by registered post/email;
- Uploaded on the common portal.
However, the Court emphasized that mere portal
upload is insufficient unless done in a conspicuous and accessible
manner, ensuring the taxpayer is aware.
Key Judgments Cited
The Court relied on two binding precedents:
Kamla Vohra v. Sales Tax Officer Class II, W.P.(C) 9261/2024 Decided on 10 July 2024, this case held:
“Uploading of notices under the heading ‘Additional
Notices’ is not sufficient service under Section 169 of the CGST Act.”
The Court noted that the GST portal had since been
restructured, but for older notices uploaded before the redesign, taxpayers
were likely to miss communications if not placed under the primary ‘Notices’
tab.
ACE
Cardiopathy Solutions (P) Ltd. v. Union of India, W.P.(C) 6758/2024 Decided on 10 May 2024, this case held:
“Service of SCN must ensure effective communication to
the taxpayer… Technical placement under obscure tabs fails the test of adequate
notice.”
This case was further supported by observations from
the Madras High Court in East Coast Constructions.
High Court’s Analysis and Ruling
1. Service Under ‘Additional Notices’ Tab Inadequate
The Court reiterated that proper service of notice
is fundamental, especially when ex parte orders of demand are being issued.
Uploading notices in a tab less frequented by taxpayers does not satisfy the
requirement under Section 169.
“The impugned SCN was uploaded on the portal in the
category of ‘Additional Notices’ which the petitioner claims was not easily
accessible…”
2. Natural Justice Violated
Without adequate service, the petitioner was denied
an opportunity to respond or seek a personal hearing.
“Petitioner deserves to be given an opportunity to
reply to the Show Cause Notice.”
3. Consistency With Past Decisions
The Court followed its previous rulings to ensure
consistency in treatment of similarly placed taxpayers.
“This Court is of the view that following the earlier
decisions passed by this Court, the Petitioner herein also deserves to be given
an opportunity…”
Final Judgment and Directions
1.
DRC-07 Order
Quashed: The impugned order dated
22.12.2023 (demand and summary) was set aside.
2.
Matter
Remanded: The case was remanded
back to the GST department for fresh adjudication.
3.
Fresh
Opportunity Granted:
o
Petitioner may
file a response to the SCN within 30 days;
o
Department must
provide a personal hearing;
o
A reasoned
order to be passed thereafter.
4.
Writ Petition
Disposed: All related applications
were disposed of.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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