Delhi HC defers GST notification challenge, lets taxpayer re-argue case pending Supreme Court verdict

Case Name

Garg Agency through its Proprietor Raj Rani Garg v. Commissioner of DGST & Ors.(W.P.C 4484/2025 & CM APPL. 20744/2025)

Key Takeaways

• Supreme Court is already considering the core issue: The Delhi High Court recognized that the validity of the impugned GST notifications is under review by the Supreme Court in S.L.P No 4240/2025 (M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors).
• Ex-parte order set aside: The court gave Garg Agency another opportunity to respond to the show cause notice and attend a personal hearing, as the previous order was passed without their participation.
• No final word on notification validity: The High Court did not decide on the legality of the notifications, leaving that question open until the Supreme Court’s decision.
• Access to GST portal ensured: The court directed that Garg Agency be given access to the GST portal to view relevant documents.

Issue

Was the issuance of certain GST notifications (Nos. 9/2023 and 56/2023, both Central and State Tax) valid under Section 168A of the Central Goods and Services Tax Act, 2017, and should the ex-parte order against Garg Agency be set aside?

Facts

• Parties: Garg Agency (petitioner) vs. Commissioner of DGST & Ors. (respondents).
• Dispute: Garg Agency challenged the validity of four GST notifications (two Central, two State) as being ultra vires (beyond the powers) of the respective GST Acts. They also sought to set aside a show cause notice and an ex-parte order passed against them for the financial year 2019-20.
• Background: The notifications in question extended deadlines for GST proceedings. Garg Agency argued these were issued without proper GST Council recommendation, as required by Section 168A of the CGST Act.
• Other courts: Various High Courts across India have given differing opinions on these notifications, and the Supreme Court is now considering the issue.
• Procedural history: Garg Agency did not file a reply or attend the personal hearing before the adjudicating authority, leading to an ex-parte order confirming the tax demand.

Arguments

Petitioner (Garg Agency)

• The impugned notifications were issued without following the proper procedure under Section 168A of the CGST Act, specifically without prior GST Council recommendation for some notifications.
• The ex-parte order was passed without giving Garg Agency a fair chance to respond or be heard.

Respondents (DGST & Ors.)

• Defended the validity of the notifications and the process followed.
• Argued that opportunities were given to Garg Agency to respond and attend hearings, but they did not avail them.

Key Legal Precedents

• Section 168A of the Central Goods and Services Tax Act, 2017: This section allows the government to extend deadlines during emergencies, but only on the recommendation of the GST Council.
• Case Laws Cited:
• DJST Traders Pvt. Ltd. vs. Union of India and Ors. (W.P.© 16499/2023): Lead case in a batch of petitions challenging the same notifications.
• M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors (S.L.P No 4240/2025): Supreme Court case currently considering the validity of the notifications.
• Other High Court decisions: Allahabad, Patna, Guwahati, Telangana, Bombay, and Punjab & Haryana High Courts have all considered the issue, with differing outcomes (e.g., Allahabad upheld Notification 9/2023, Guwahati quashed Notification 56/2023).

Judgement

• Order set aside: The Delhi High Court set aside the ex-parte order against Garg Agency and sent the matter back to the adjudicating authority.
• Fresh opportunity: Garg Agency is allowed to file a reply to the show cause notice by 10th July 2025 and must be given a personal hearing. The adjudicating authority is to pass a fresh order after considering their reply and submissions.
• Access to GST portal: The court directed that Garg Agency be given access to the GST portal to view all relevant documents.
• Validity of notifications left open: The court made it clear that the question of whether the notifications are valid will be decided by the Supreme Court, and any order passed by the adjudicating authority will be subject to the Supreme Court’s decision in S.L.P No 4240/2025.
• Petition disposed: The case was disposed of in these terms, with all rights and remedies of the parties left open.

FAQs

Q1: What was Garg Agency’s main complaint?

A: They argued that certain GST notifications extending deadlines were issued without proper procedure and that the ex-parte order against them was unfair.

Q2: Did the Delhi High Court decide if the notifications were valid?

A: No, the court left that question open, since the Supreme Court is already considering the issue.

Q3: What happens next for Garg Agency?

A: They get another chance to respond to the show cause notice and attend a hearing. The adjudicating authority will pass a fresh order after considering their reply.

Q4: What if the Supreme Court later finds the notifications invalid?

A: Any order passed by the adjudicating authority will be subject to the Supreme Court’s final decision on the validity of the notifications.

Q5: Why did the court set aside the ex-parte order?

A: Because Garg Agency did not get a fair opportunity to present their case, and the court wanted to ensure due process was followed.

Q6: What is Section 168A of the CGST Act?

A: It allows the government to extend deadlines for GST proceedings during emergencies, but only with the GST Council’s recommendation.