GST Adjudicating Authority must Examine all Objections Independently in SCN: Allahabad HC Directs Reply Within Four Weeks [Read Order]
The High Court refused to quash the SCN issued under Section 73, holding that it did not suffer from any jurisdictional defect despite a pending CESTAT appeal and directed petitioner to file a reply within four weeks.
In the recent ruling, the Allahabad High Court refused to interfere with a show-cause notice issued under Section 73 of the CGST Act, 2017. It directed the petitioner to file a detailed reply within four weeks and the adjudicating authority should independently assess all objections, including on validity, after granting due hearing.
The Petitioner, M/S Ds Chewing Products LLP, filed a petition challenging a show-cause notice dated 18.09.2025 issued under Section 73 of the Central Goodsand Service Tax (CGST) Act, 2017.
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The Section 73 of the Central Goods and Service Tax (CGST) Act, 2017 explained that: Determination of tax 1[, 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:
“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.”
The Counsel for the Petitioner, Rahul Agarwal, argued that the show-cause notice contradicted the CESTAT's decision in Excise Appeal No. 70442 of 2024 dated 06.08.2025. The petitioner further stated that the notice was based on hypothetical premises and that the revenue could not compel the assessee to conduct business affairs according to its preferences and the petitioner maintained that it had adopted transactional value for manufactured goods and discharged tax liability accordingly.
On the other hand, the counsel for the Respondent, Dhananjay Awasthi, submitted that the CESTAT order relied upon by the petitioner had been challenged before the Supreme Court in Civil Appeal Diary No. 58081 of 2025, and also lacked finality.
The Bench of Allahabad High Court consisted of Justice Swarupama Chaturvedi and Justice Saumitra Dayal Singh, heard and decided the matter.
The High Court, after considering the submissions made by both the counsels, observed that the show-cause notice did not suffer from inherent jurisdictional defects and that the petitioner was being afforded an opportunity of hearing. The Court held that applying the principle of judicial discipline at this stage would be premature.
Further, the High Court issued directions that the petitioner must file a reply to the show-cause notice within four weeks; the adjudicating authority must independently examine all grounds and objections raised by the petitioner; Due opportunity of hearing must be provided to the petitioner before adjudication and the validity of the show-cause notice itself must be considered on merit alongside the substantive issues
Thus, the petition was disposed of with these aforesaid directions.
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