Delhi HC Quashes GST Order Citing Hearing Denial, Imposes ₹50K Cost on Petitioner | Biz Flow Kit

A GST adjudication order has been set aside by the Delhi High Court due to a breach of natural justice. At the same time, the court has imposed a penalty of Rs. 50,000 on the taxpayer for delaying the approach to the court.

The bench, consisting of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul, stated that the taxpayer had approached the writ jurisdiction at a late stage. They carried that while a refusal of hearing can invalidate the proceedings, the delay caused by the taxpayer cannot be overlooked. It was this delay in seeking the Court’s intervention that resulted in the imposition of costs.

This case challenges an Order-in-Original dated August 17, 2024, in which the GST authorities confirmed a demand of ₹20.76 lakh for the fiscal year 2019-20 u/s 73 of the Delhi Goods and Services Tax Act, 2017. The demand was raised due to an alleged incorrect declaration of tax obligations in Form GSTR-9 and the improper availment of Input Tax Credit (ITC), including blocked credits u/s 17(5) of the Act.

The taxpayer mentioned that the SCN on May 29, 2024, was only uploaded on the GST portal and was not shown in the outstanding tax liability section. It was claimed that no alert was obtained from the department, which resulted in the taxpayer being clueless about the proceedings and, therefore, not able to submit a response or attend the personal hearing.

HC said that it was undisputed that no response had been submitted before SCN and that no chance had been furnished to the taxpayer for a personal hearing. The Court outlined that under the principles of natural justice, the right to be heard is an inalienable right and that any adjudication in its absence could not be sustained.

The impugned order has been set aside by the Court, and allowed the taxpayer to submit a response to the SCN and participate in a fresh adjudication. The relief was given on condition that the deposit of the complete demand amount be made with the department.

The Court ordered the immediate lifting of the provisional attachment on the taxpayer’s bank account. It noted that continuing such coercive action would be unjustified since the underlying order had been set aside and the case was sent back for a fresh review.

The Court emphasised that it had not assessed the merits of the case, and all rights and arguments of both parties remain open in the new proceedings.

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The high court has imposed a Rs. 50,000 penalty on the taxpayer for the late invoking of the writ jurisdiction, asking that 25,000 be paid before the Delhi High Court Bar Association and Rs. 25,000 to the Delhi High Court Clerk Association. The taxpayer has been asked to appear before the related GST authorities on April 30, 2026, for additional proceedings.