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I have come across various Show Cause Notice or Orders for levying penalty or cancelling registration etc are issued without specifying the charges or specifying the contraventions due to which Department has taken such extreme action against you. These actions have adverse consequences but who cares?

Many a times, Show Cause Notice (SCN) or Orders had been issued in standard format without specifying allegation. The Standard Formats usually have irrelevant portions and Officers use them without striking out irrelevant portions and without stating specific contravention committed. These types of SCN does not enable assesee to file reply.

The reason why the charges should be specific in any order against you

Show cause notice issued in standard format without striking out irrelevant portions and without stating specific contravention committed, was not valid. SCN was vague and violates principle of natural justice. SCN is in the standard format and neither any particulars have been struck off, nor specific contravention has been indicated to enable the petitioner to furnish a proper reply to defend itself. – Jharkhand High Court in Roshan Kumar Chouhan vs Commissioer of State Tax [Writ Petition (Tax) No. 1849/2022, dated 3-Aug-2022]

In case of Jinesh Associates vs Commissioner of Commercial Taxes [Writ Petition No. 2929/2022, dated 23-Feb-2022] a SCN was issued by the Proper Officer without specifying time and date in show cause notice as regards for personal hearing. Karnataka High Court held that such SCN is in violation of Principles of Natural Justice and therefore, registration cancellation order passed without hearing was to be set aside.

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Allahabad High Court in case of Ram Krishna Garg Supplier vs State of Uttar Pradesh [Writ Petition (Tax) No. 1064/2021, dated 15-Jul-2022] found that Registration Cancellation Order U/s 29(2) of UP GST was passed but in the SCN and Cancellation Order specific grounds for cancellation or contravention were not communicated. Thus, High Court set aside the registration cancellation order. High Court further observed that [Para 7], "Cancellation of registration has most serious civil consequences. While Section 29(1) of the Act provides for specific grounds for cancellation with effect from the date of occurrence of certain events, sub-section (2) provides for harsher consequences including cancellation of registration with retrospective date. However, a registration may not be cancelled on mere whims and fancies of the Proper Officer." [Para 8], "In the present case, the show cause notice was issued, ostensibly with reference to Section 29(2)(a) of the Act, in as much as, the notice alleged non-compliance of specified provisions of GST Act or the Rules. However, that notice did not disclose the exact violation of the Act or the Rules, alleged. Unless that allegation was specified in the notice with details and unless material considered adverse to the petitioner had been confronted to it for the purposes of eliciting its reply thereto, the notice would remain completely vague and mute."

 

Honourable Supreme Court in Amrit Foods vs Commissioner of Central Excise, Uttar Pradesh [Civil Appeal No. 1329/2003 & 7275/2003, dated 26-Oct-2005] held that neither show cause notice nor order of Commissioner specified which particular clause of Rule allegedly contravened by appellant and therefore, Tribunal Order setting aside the Penalty is upheld. The purpose of SCN or Order is to put Assessee on notice as to exact nature of contravention for which assessee was liable under provisions of Rule.

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It is safe to conclude that SCN or Order should be specific and where is doesn't allege specific contravention such SCN or Order are vague and against principles of natural justice and thus unsustainable.


 

Published by

Abhishek Raja
(Practising CA)
Category GST   Report

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