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Facts of the Case

M/s Creative Impex challenged an adjudication order dated 30.12.2025 passed pursuant to a show-cause notice issued under Section 74 of the Central Goods and Services Tax Act, 2017 read with Rule 142(1) of the CGST Rules and the corresponding Punjab GST Act, alleging evasion of GST for tax period 2019-20 on account of suspicious transactions, before the Punjab and Haryana High Court. The petitioner had filed a written response dated 02.09.2021 to the show-cause notice, but the impugned adjudication order incorrectly recorded that no response had been filed at all.

Issues Involved

  1. Whether an adjudication order passed under Section 74 of the CGST Act, which erroneously records that the petitioner filed no reply when a written response was in fact on record, can be sustained.
  2. Whether such an order reflects non-application of mind warranting it be set aside.

Petitioner's Arguments

  • The petitioner submitted that a written response to the show-cause notice dated 02.09.2021 had in fact been filed, but this was completely ignored, with the impugned order wrongly recording non-filing of any response.
  • It was argued that this factual error demonstrated non-application of mind by the proper officer, rendering the adjudication order unsustainable.

Respondent's Arguments

  • The learned Additional Advocate General for the State fairly and candidly conceded that the petitioner had indeed filed a written response to the show-cause notice dated 02.09.2021, but that this had been inadvertently overlooked by the proper officer while passing the adjudication order dated 30.12.2025.

Court Order / Findings

  • In light of the State's candid concession, the Court held that the impugned adjudication order dated 30.12.2025 was passed without application of mind, since it proceeded on the incorrect premise that no reply had been filed.
  • The adjudication order was set aside, with liberty granted to the respondents to proceed afresh against the petitioner in accordance with law, presumably after duly considering the petitioner's written response.

Important Clarification

  • An adjudication order under Section 74 that misrecords or overlooks a written reply actually filed by the taxpayer reflects non-application of mind and is liable to be set aside, even on a straightforward factual error rather than a substantive point of law.
  • Setting aside such an order does not foreclose the department's right to re-adjudicate on merits, provided the taxpayer's reply is now duly considered.

Sections Involved

  • Section 74, CGST Act, 2017 and the corresponding provision of the Punjab GST Act, 2017 – govern determination of tax not paid by reason of fraud or suppression.
  • Rule 142(1), CGST Rules, 2017 – prescribes the procedure for communication of the show-cause notice and summary of demand.

Decision – In Favour of

The decision is in favour of the assessee. The adjudication order was set aside for non-application of mind in overlooking the petitioner's written reply, with liberty to the department to proceed afresh in accordance with law.

Case Details

Court: High Court of Punjab and Haryana at Chandigarh
Case No.: CWP No. 9446/2026
CNR / Citation: Not available in judgment text
Coram: Hon'ble Mr. Justice Deepak Sibal and Hon'ble Ms. Justice Lapita Banerji
Date of Order: 21 April 2026

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