Failure of Chartered Accountant to Communicate Show Cause Notice Is Not a Ground for Equitable Interference Against Ex-Parte GST Demand Orders

The Hon’ble Delhi High Court in the case of M/s Fone Zone NXT v. Commissioner of DGST & Anr. [W.P.(C) 888/2026 & CM APPL. 4354/2026, order dated January 22, 2026] held that non-response to show cause notices on the ground that the Chartered Accountant failed to inform the assessee does not warrant exercise of equity or interference with ex-parte orders passed under Section 73 of the GST law, and that willingness to deposit part of the demand cannot justify deviation from the statutory procedure.

Facts:

M/s. Fone Zone NXT (“the Petitioner”) is a dealer in mobile phones and allied accessories and obtained GST registration with the email address furnished on the GST portal being that of its Chartered Accountant.

Commissioner of DGST & Anr. (“the Respondent”) issued show cause notices for multiple assessment years proposing demand on account of ITC mismatch and retrospective cancellation of suppliers’ registrations and, upon non-filing of replies and non-appearance for personal hearing, passed ex-parte orders under Section 73 of the Delhi Goods and Service Tax Act, 2017 (“DGST Act”) and initiated provisional attachment.

The Petitioner contended that there was a failure on the part of the Chartered Accountant to communicate the show cause notices to the Petitioner and that the Petitioner should not be penalised for such failure; it was further contended that the Petitioner was willing to deposit 50% of the outstanding demand and sought equitable relief by grant of fresh hearing.

The Respondent contended that the department had proceeded strictly in accordance with the statutory provisions, that the Petitioner was aware that the GST registration was linked to the email address of the Chartered Accountant, and that it was the Petitioner’s failure to respond to the show cause notices which resulted in the passing of the impugned orders.

Aggrieved by the ex-parte assessment orders passed under Section 73, provisional attachment of bank accounts, and denial of opportunity of fresh hearing, the Petitioner approached the High Court by way of writ petitions under Article 226 of the Constitution of India.

Issue:

Whether ex-parte orders passed under Section 73 of the GST law can be quashed on the ground that the Chartered Accountant failed to communicate the show cause notices to the assessee, and whether willingness to deposit part of the demand warrants equitable interference by the Court?

Held:

The Hon’ble Delhi High Court in W.P.(C) 888/2026  held as under:

• Noted that, the fact that the Petitioner had provided the email address of his Chartered Accountant for the purpose of GST registration was within the Petitioner’s notice. The Petitioner sought to attribute the entire lapse to his Chartered Accountant for not communicating the show cause notices, leading to the passing of the impugned orders.
• Observed that, It is very easy to blame a professional, like the one in the present case, as such professional is not before this Court to defend his interest.
• Noted that, the Court was unable to satisfy ourselves as to the ground raised by the petitioner is sufficient enough to infer that there was a default on the part of the Chartered Accountant and the Petitioner was required to suffer for the same.
• Noted that, even if the Petitioner is willing to deposit 50% of the liability, that by itself will not call upon us to deviate from the statutory procedure established by law.
• Held that, the Petitions lacked merit and declined to show indulgence, and accordingly dismissed the writ petitions.

Our Comments:

The High Court examined the plea of equitable interference in light of the statutory framework under Section 73 and the factual conduct of the petitioner. The Court expressly distinguished the reliance placed on M/s Walsons Services Pvt. Ltd. v. Sales Tax Officer/Class II (STO), DGST & Anr., [W.P.(C) 16730/2025, order dated on November 14, 2025], noting that the said decision was rendered on a different factual matrix where equity and discretion were exercised by imposing costs.

In the present case, the Court found that the Petitioner was aware of the suspension of registration and the linkage of GST registration to the Chartered Accountant’s email, and therefore could not attribute the lapse solely to the professional. The Court declined to extend equitable relief and reiterated that statutory procedure cannot be bypassed merely because the assessee expresses willingness to deposit part of the demand.

Relevant Provisions:

Section 73 of the Central Goods and Services Tax Act, 2017

“73. Determination of tax pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-

(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.”

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