GST SCN Issuance before reply by assessee to Pre-Notice is Invalid: Delhi HC [Read Order]

The Delhi High Court has set aside a Show Cause Notice (SCN) issued by the tax department, holding that its issuance before the assessee had a reasonable opportunity to reply to a prior notice was a violation of the principles of natural justice.

Varian Medical Systems International India Pvt. Ltd., the petitioner, filed an appeal challenging an SCN dated 27th November 2024 and a subsequent final audit report dated 13th February 2025. These actions stemmed from an audit conducted for Financial Years 2017-18 to 2022-23.

Counsel for the petitioner argued that the audit report was issued beyond the period prescribed under Section 65 of the CGST Act. More significantly, it was contended that the SCN was issued prematurely on 27th November 2024, even though the pre-Show Cause Notice (pre-SCN) dated 25th November 2024 had granted the petitioner time until 28th November 2024 to file its response.

The Senior Standing Counsel for the department argued that the audit was concluded within the three-month period stipulated by Section 65, and the final report was communicated within the subsequent 30-day window permitted by law.

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A division bench comprising Justice Prathiba M. Singh and Justice Shail Jain examined the timeline and found that the audit report was communicated within the permissible period, rejecting the petitioner's contention on this point. However, the court found merit in the second argument.

It was observed that the pre-SCN explicitly allowed the petitioner to file submissions until 28th November 2024. The department's act of issuing the final SCN on 27th November 2024, a day before the deadline, was held to be a "complete violation of the principles of natural justice."

The court set aside the impugned SCN. The proceedings were relegated to the pre-SCN stage, with the court granting the petitioner liberty to file its reply to the pre-SCN. The department was then directed to decide afresh whether a new SCN should be issued, in accordance with law.

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