The Delhi High Court has set aside a tax order issued against Adit Buildwell Pvt. Ltd., ruling that the failure of the Commissioner of Central Goods and Service Tax to address a formal request for an extension of time to submit documents constitutes a clear violation of the principles of natural justice. In a decisive judgment, the Division Bench, comprising Justice Avneesh Jhingan and Justice Amit Sharma, underscored the necessity for quasi-judicial authorities to exercise transparency and fairness when handling procedural requests from taxpayers.

The litigation stemmed from a Show Cause Notice issued to the petitioner, a registered dealer under the service tax regime. Following the submission of a formal reply to the notice on May 23, 2022, the tax authorities granted the company an opportunity for a personal hearing on November 7, 2023. While the hearing was initially adjourned to November 15, 2023, at the request of the petitioner, the company subsequently sought further time until November 24, 2023, to compile and present the requisite documentation. Without formally acknowledging or rejecting this request, the tax department proceeded to pass the impugned order on November 24, 2023, effectively shutting the door on the petitioner’s ability to defend its position with the intended evidence.

Procedural Rigor and Administrative Accountability

The core of the legal dispute centered on whether the department’s decision to proceed with the order was legally sustainable given the pending request for an extension. Counsel for the petitioner argued that the lack of consideration for the request deprived the company of a reasonable opportunity to present its defense. Conversely, the Revenue contended that sufficient opportunities had already been provided, noting that nine days had passed between the adjournment date and the final order. The Court, however, rejected this argument, emphasizing that an authority’s silence regarding a pending procedural request cannot be interpreted as a denial of the request itself.

The Court held that the quasi-judicial nature of the proceedings demands that the authority at least process and communicate its decision on such applications. Justice Jhingan, writing for the Bench, remarked, “The minimum that was expected from a quasi-judicial authority was at least to deal with the request for grant of further time and thereafter take an appropriate decision thereon.” By failing to address the email communication, the department bypassed the basic procedural safeguards intended to ensure that a taxpayer has a fair chance to present their case.

The Bench further observed that once a request for extension remains pending, the taxpayer is placed in a position of uncertainty. The Court noted, “Once the request for further time was not considered then there was no occasion for the petitioner to file the additional documents.” By finalizing the order on the very date the extension was sought until, the department acted in a manner that the Court deemed inconsistent with the requirements of due process.

Judicial Oversight and Natural Justice

The respondents had initially raised the issue of an alternative remedy, suggesting that the petitioner should have pursued a statutory appeal rather than approaching the High Court through a writ petition. While the Court acknowledged the standard practice of relegating parties to statutory remedies, it highlighted that such self-imposed restrictions are not absolute. Relying on the established legal position that permits judicial intervention in cases involving a breach of the principles of natural justice, the Court asserted its discretion to entertain the petition.

This decision reinforces the long-standing judicial mandate that administrative bodies cannot prioritize technical convenience over the core requirements of fairness. The judgment clarifies that when a government entity acts as a quasi-judicial body, its procedural decisions are subject to rigorous scrutiny, especially when those decisions directly impede a party's right to defend themselves against a tax liability.

Remand and Future Proceedings

Following the quashing of the impugned order, the Court remanded the matter back to the office of the Commissioner of Central Goods and Service Tax, South Commissionerate. The proceedings are directed to resume from the stage they occupied on November 15, 2023, ensuring that the taxpayer is granted a fair opportunity to submit the requested documents and make additional submissions.

To ensure the prompt resolution of the matter and to prevent further administrative delays or procedural deadlocks, the High Court issued a specific operative direction to the parties. The petitioner or its authorized representative has been instructed to appear before the designated office of the respondent on December 2, 2026, at 11:00 a.m. By setting this clear schedule, the Court has provided a concrete pathway for the department to conduct a fresh assessment that adheres to the legal requirements of natural justice. This ruling serves as a reminder to tax authorities that the exercise of their quasi-judicial functions must remain tethered to the principles of fair play and transparent communication, particularly when dealing with requests that bear upon a party's fundamental right to be heard. The department is now mandated to proceed in accordance with the law, ensuring that the upcoming assessment is conducted with full consideration of all material evidence the petitioner intends to place on record.