M/S. Kalyr Retail PVT. LTD. Successor In Interest Of M/S. Freeway Clothing Company vs. Commissioner Of Goods And Services Tax, Delhi & Ors.

Facts

The Petitioner, M/s. Kalyr Retail Pvt. Ltd., successor in interest to M/s. Freeway Clothing Company, challenged Show Cause Notices (SCNs) dated May 31, 2024, and September 26, 2023, and the consequent orders dated August 1, 2024, and December 20, 2023, passed by the Sales Tax Officer Class II/AVATO, Delhi. The demands raised were for Financial Years 2017-18 and 2018-19, totaling ₹2,03,70,350.00 and ₹4,10,050.00 respectively. The Petitioner also challenged certain GST notifications. The Petitioner contended that they obtained a fresh GST registration after a business succession agreement and that the GST registration of the erstwhile entity was sought to be cancelled. The cancellation application was rejected, and the SCN dated May 31, 2024, was allegedly not brought to their notice, leading to no reply being filed. The Petitioner claimed they only became aware of the SCNs and orders in July 2025.

Held

The Court held that the Petitioner did not get a proper opportunity to be heard and no reply was filed to the impugned SCNs. Citing the precedent in *Sugandha Enterprises*, the Court found that the matter deserved to be remanded back to the concerned Adjudicating Authority. The impugned orders were set aside, and the Petitioner was granted time until November 30, 2025, to file a reply to the impugned SCNs. Upon filing the reply, the Adjudicating Authority was directed to issue a notice for personal hearing. The Court clarified that the issue regarding the validity of the impugned notifications was left open and would be subject to the outcome of the Supreme Court's decision in *M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax &Ors.* and the High Court's decision in *Engineers India Limited v. Union of India &Ors.*. Costs of ₹25,000 in W.P.(C) 15918/2025 and ₹10,000 in W.P.(C) 16530/2025 were imposed on the Petitioner, payable to the GST Department within two weeks.

Key Issues

1. Whether the impugned Show Cause Notices (SCNs) and consequent orders, issued by the Sales Tax Officer Class II/AVATO, Delhi, are valid, considering the Petitioner's claim of not receiving proper notice and an opportunity to file a reply. 2. Whether the impugned notifications, namely Notification No. 56/2023-Central Tax, Notification No. 56/2023-State Tax, Notification No. 9/2023-Central Tax, and Notification No. 09/2023-State Tax, are valid. Petitioner's Arguments: The Petitioner argued that they did not receive proper notice of the SCN dated May 31, 2024, and therefore, could not file a reply. They also stated that the GST portal of the erstwhile entity was not accessed regularly after the business succession. The Petitioner relied on the principle of natural justice and a previous High Court judgment in *Sugandha Enterprises* where a similar situation led to a remand. Revenue's Arguments: The judgment does not explicitly record arguments from the Revenue concerning the Petitioner's claim of non-receipt of notice or the validity of the SCNs and orders. However, the Revenue is the respondent in the proceedings.