GST Order Set Aside for Violation of Natural Justice and Remanded Subject to Deposit

The Petitioner, a registered company under the GST regime, challenged an Order-in-Original dated 17.08.2024, which confirmed a tax demand of ₹20,76,630 under Section 73 of the Delhi Goods and Services Tax (DGST) Act, 2017, for the financial year 2019-2020.

The demand arose from alleged incorrect declarations of Input Tax Credit (ITC) and availment of blocked credits under Section 17(5).

The Petitioner contended that the Show Cause Notice (SCN) dated 29.05.2024 was only uploaded on the portal without any alert or intimation, preventing them from filing a reply or attending the hearing.

Following the Petitioner's failure to pay, the Respondent initiated recovery proceedings and provisionally attached the Petitioner’s bank account on 16.01.2026 under Section 83.

The Petitioner sought a de-novo adjudication, offering to deposit the demand amount to prove bona fides.

1. Whether the impugned Order-in-Original and subsequent recovery actions violated the principles of natural justice due to the Petitioner's inability to participate in the proceedings?

2. Whether the provisional attachment of the Petitioner’s bank account under Section 83 should be maintained while the matter is remanded for fresh adjudication?

Section 73 of the DGST Act regarding the determination of tax not paid or short paid.

Section 17(5) concerning ineligible or blocked ITC.

Section 83 regarding the provisional attachment of property, including bank accounts, to protect revenue.

Administrative law principle of Natural Justice, specifically the "inalienable right" of a party to be heard before an adverse order is passed.

The Court observed that the Petitioner had indeed failed to respond to the SCN or attend the personal hearing, resulting in an ex-parte confirmation of the demand.

While the Court affirmed that the right to be heard is fundamental under natural justice, it also noted the Petitioner’s delay in approaching the Court.

To balance these interests, the Court accepted the Petitioner’s offer to deposit the entire demand amount as a condition for remand.

Regarding the provisional attachment under Section 83, the Court reasoned that since the underlying Order-in-Original was being set aside for de-novo adjudication, the continued attachment of the bank account was no longer warranted at this procedural stage.

The Respondents were directed to forthwith lift the provisional attachment of the Petitioner’s bank account.

This relief was made subject to the Petitioner depositing the entire demand amount with Respondent No. 1 and paying costs of ₹50,000 (split equally between the Delhi High Court Bar Association and the Clerk Association).

The Petitioner was directed to appear before the authorities on 30.04.2026 for a fresh hearing.