Facts of the Case

The petitioner, M/S Sakshi Enterprises, challenged an order dated 19.4.2023 passed by respondent No. 2, directing it to deposit Rs. 63,12,126/- under the GST law. The petitioner's case was that a show-cause notice dated 17.3.2023, uploaded on the GST Portal by the Assistant Commissioner, State Tax, Sector-8, Muzaffar Nagar, fixed 17.4.2023 as the date to deposit Rs. 62,69,406/-, but this notice was never actually served on him and he remained unaware of the proceedings; the impugned order dated 19.4.2023 was consequently passed behind his back, fixing a higher liability. The petitioner also pointed out that he had already closed his business unit on 29.8.2019 and had duly intimated this closure to respondent No. 2, pursuant to which his registration had been cancelled.

Issues Involved

  1. Whether the demand order dated 19.4.2023 could be sustained when the underlying show-cause notice was not shown to have been served on the petitioner.
  2. Whether the petitioner ought to be granted a fresh opportunity to respond, including consideration of the fact of prior closure of his business.

Petitioner's Arguments

  • The show-cause notice dated 17.3.2023 was never served on him, and he remained unaware of the proceedings until the demand order dated 19.4.2023 was passed.
  • The purpose of the writ petition would be served if the department issued a fresh notice within 15 days, allowing him to file a reply addressing all aspects, including the fact that his unit was closed on 29.8.2019 and this closure had been duly intimated, leading to cancellation of his registration.

Respondent's Arguments

  • Counsel for the State respondents raised no objection to the course proposed by the petitioner, agreeing to the issuance of a fresh notice and consideration of a fresh reply.

Court Order / Findings

  • Without expressing any opinion on the merits of the underlying dispute, the Court accepted the course proposed by both sides.
  • The Court quashed the order dated 19.4.2023 and directed that the petitioner be permitted to approach respondent No. 2 and obtain a fresh notice within 15 days, following which the petitioner would file his reply within the time stipulated by respondent No. 2.
  • While deciding the fresh notice, respondent No. 2 was directed to afford the petitioner an opportunity of personal hearing.

Important Clarification

A GST demand order passed on the strength of a show-cause notice that the taxpayer credibly claims was never served will be quashed and the matter remitted for a fresh notice, reply opportunity and personal hearing — courts will readily accept a consent-based remedy of this kind without adjudicating the merits of the underlying tax dispute.

Sections Involved

  • Central/Uttar Pradesh Goods and Services Tax Act, 2017 – governs issuance of show-cause notices and demand orders, and requires proper service and opportunity of hearing before confirming a demand.

Decision – In Favour of

The decision was in favour of the Assessee, with the impugned demand order quashed and the matter remitted for a fresh notice, reply and personal hearing, without a ruling on the underlying merits.

Case Details

  • Court: High Court of Judicature at Allahabad
  • Case Number: WRIT TAX No. - 809 of 2023
  • Neutral Citation: 2023:AHC:152506-DB
  • Coram: Hon'ble Pritinker Diwaker, Chief Justice and Hon'ble Ashutosh Srivastava, J.
  • Date of Order: 31 July 2023

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.