Delhi HC Sets Aside Tax Order Against Adit Buildwell, Remands Case After Commissioner Failed To Consider Its Request For More Time To File Documents

The petitioner, a registered dealer with the Service Tax Department, received a show-cause notice and filed its reply on 23 May 2022.

After a personal hearing on 7 November 2023, the matter was adjourned to 15 November at the petitioner’s request.

On 15 November, the petitioner sought further time, until 24 November 2023, to produce documents.

The Commissioner did not address that request and passed the impugned order on 24 November, relying in part on the petitioner’s failure to produce relevant documents.

The petitioner challenged the order under Article 226, notwithstanding the availability of a statutory appeal.

Under Article 226, the High Court ordinarily exercises discretion not to entertain a writ petition where an effective and efficacious alternative remedy is available.

However, as recognised in Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1, that rule does not bar writ relief, among other exceptions, where the proceedings involve a violation of the principles of natural justice.

A quasi-judicial authority must address a party’s request for further time before deciding the matter, particularly where the decision relies on the party’s failure to produce material.

The petitioner’s request sought time until 24 November, the very date on which the Commissioner passed the order.

Although the respondent asserted that it had waited nine days after the earlier deadline of 15 November, that did not answer the petitioner’s request for an extension until 24 November.

The impugned order did not even note the request, despite relying on the petitioner’s failure to produce relevant documents.

The Commissioner was required at least to consider and decide the request before proceeding.

That failure denied the petitioner a reasonable opportunity to defend itself and brought the case within the natural-justice exception to the alternative-remedy rule.

The matter was remanded to respondent no. 1 for fresh determination from the stage at which proceedings stood on 15 November 2023.

The petitioner or its authorised representative was directed to appear before respondent no. 1 on 2 December 2026 at 11:00 a.m.; the respondent was directed to proceed in accordance with law.

The petition and pending application were disposed of.