Demand order not sustainable without issuance of SCN and fair opportunity to respond

Last updated: 14 January 2023

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The Allahabad High Court has quashed a demand order issued by the Revenue Department because a crucial Show Cause Notice (SCN) in Form GST DRC-01A was not served. The court found that the absence of this initial notice, which details tax, interest, and penalties, fundamentally flawed the proceedings. Even a subsequent reminder could not rectify this defect, leading to the cancellation of the order and allowing the Revenue Department to restart the process correctly.

Court :
Allahabad High Court

Brief :
The Hon'ble Allahabad High Court in Skyline Automation Industries v. State of Uttar Pradesh [Writ Tax No. - 1512 of 2022 dated January 2, 2023] quashed the demand order passed in Form DRC-07, by the Revenue Department, on the grounds that a notice in Part A of FORM GST DRC-01A under Rule 142(1A) of Central Goods and Services Rules, 2017 ("the CGST Rules") was not issued. Held that, subsequent reminder would not have cured inherent defect in proceedings initiated against the assessee as the initiation of proceedings itself are bad, thus, the order passed consequent thereto will also fall.

Citation :
Writ Tax No. - 1512 of 2022 dated January 2, 2023

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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