Provisional Bank Account Attachment Lifted as Court Upholds Principles of Natural Justice
In a significant ruling, the Delhi High Court has set aside a tax demand order against Sun International Limited, emphasizing the importance of the principles of natural justice. The court ruled that the petitioner must be provided with an opportunity to be heard before finalizing tax demands under the Delhi Goods and Services Tax Act, 2017 (DGST Act).
The case involved a writ petition filed by Sun International Limited challenging the impugned Order-in-Original dated August 17, 2024, which confirmed a tax demand of Rs. 20,76,630 for the financial year 2019-2020. The petitioner argued that the show cause notice was uploaded on the GST portal without any alert, leading to a lack of response and absence from the personal hearing.
Justice Ajay Digpaul, presiding over the case, acknowledged the petitioner's contention, stating that the right to be heard is an inalienable right under the principles of natural justice. Consequently, the court set aside the impugned order, allowing the petitioner to file a reply and attend a personal hearing for de novo adjudication, subject to the deposit of the entire demand amount.
Furthermore, the court directed the respondents to lift the provisional attachment of the petitioner's bank account, which had been imposed as part of recovery proceedings under Section 83 of the DGST Act. The court clarified that the attachment was unwarranted given the remand for fresh adjudication.
Despite ruling in favor of the petitioner, the court imposed costs of Rs. 50,000 on Sun International Limited for the belated filing of the writ petition. The costs are to be shared equally between the Delhi High Court Bar Association and the Delhi High Court Clerk Association.
The court has directed the petitioner to appear before the respondent authorities on April 30, 2026, for further proceedings, keeping all rights and remedies of the parties open.
Bottom Line:
Principles of Natural Justice - Petitioner must be given an opportunity to be heard before finalizing tax demands under the Delhi Goods and Services Tax Act, 2017.
Statutory provision(s): Delhi Goods and Services Tax Act, 2017 Section 73, Delhi Goods and Services Tax Act, 2017 Section 83
