GST Update

Desk of CA. Praveen Sharma – 914 Series (CAPS)

Delhi High Court in the case of PHX Electronics Pvt. Ltd.

The Delhi High Court examined a writ petition challenging a show cause notice issued in 2019 under Section 130 of the CGST Act for confiscation of goods.

The matter originated from a DGGI search wherein excess stock of televisions and motherboards valued at around ?1.34 crore was allegedly found.

The proceedings were delayed for several years due to jurisdictional confusion, as different CGST formations disputed authority to adjudicate the show cause notice.

Though no reply was filed earlier, the petitioner agreed to submit a reply on the condition that the matter be concluded within a fixed timeframe, citing fast obsolescence of electronic goods.

The Court highlighted an inconsistency between Section 67(6) of the CGST Act and Rule 140 of the CGST Rules, where provisional release effectively requires payment of tax, interest, and penalty.

It was also observed that while provisional release was mentioned in the show cause notice, no specific amount or clear conditions were communicated by the department.

Considering the issue to be of a broader policy nature, the Court directed that the matter be placed before the GST Council for appropriate consideration.

The petitioner was allowed to file a reply by 15 January 2026, and the department was directed to grant a personal hearing and complete adjudication by 15 March 2026, with all issues kept open.

LINK:CA. Praveen Sharma on Linkedin

Regards
CAPS