Top Stories No SCN was issued to prior to Demand Order: Delhi HC sets aside Order u/s 73 of CGST Act [Read Order] Section 73 of the Central Goods and Service Tax (CGST) Act mandates issuance of show cause notice prior to passing an order creating a demand By Aiswarya Krishnadas – On April 14, 2024 8:00 am – 2 mins read The Delhi High Court has set aside the order under Section 73 of the Central Goods and Service Tax ( CGST ) Act, 2017 as no Show Cause Notice ( SCN ) was issued prior to the demand order. The Petitioner impugned order, whereby a demand has been created against the petitioner and the same has been set off against blocked ITC. The Section 73 of the CGST Act mandates issuance of show cause notice prior to passing an order creating a demand.

In the instant case, admittedly, no show cause notice was issued to the petitioner prior to impugned order being passed. A show cause notice dated 16.06.2023 was issued proposing to cancel the GST registration of the petitioner, however, the said proceedings were dropped by order dated 25.08.2023 upon consideration of the reply of the petitioner. The court observed that since no show cause notice preceded the contested order, solely on this technicality, the order is deemed invalid and is therefore annulled. It was clarified that the authorities have the liberty to issue an appropriate order after giving the petitioner a proper show cause notice and an opportunity for a personal hearing. As per Section 73 of CGST Act,  determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful- misstatement or suppression of facts.

If the proper officer finds that tax hasn’t been paid or was short-paid, or if there’s been an erroneous refund, or wrongful utilization of input tax credit, excluding cases of fraud or intentional misstatement to evade tax, they must notify the liable person. This notice demands an explanation as to why the specified amount, along with interest and penalties under the Act, shouldn’t be paid. The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja concluded that impugned order has been set aside solely on the ground of infraction of principles of natural justice. All rights and contentions of the parties are reserved Petition is accordingly disposed of in the above terms. To Read the full text of the Order CLICK HERE