Facts of the Case

M/s Creative Impex was issued a show cause notice dated 02.09.2021 under Section 74 of the CGST Act, 2017 read with Rule 142(1) of the CGST Rules and the corresponding PGST Act provisions, alleging evasion of GST on account of suspicious transactions for the tax period 2019-20. The petitioner filed a written response to the notice. However, in the impugned adjudication order dated 30.12.2025, the adjudicating authority proceeded on the incorrect premise that no written response had been filed, and confirmed the demand accordingly.

Issues Involved

  1. Whether an adjudication order passed on the erroneous premise that no reply was filed, when a written reply had in fact been submitted, can be sustained.

Petitioner's Arguments

  • The petitioner had filed a written response to the show cause notice, but the adjudication order recorded that no response was filed and proceeded to confirm the demand without considering the reply.

Respondent's Arguments

  • Learned State counsel fairly conceded that the petitioner's written response had in fact been filed but was inadvertently overlooked by the proper officer while passing the adjudication order.

Court Order / Findings

  • On the State's own concession that the petitioner's reply was on record but was overlooked, the Court found the adjudication order was passed without application of mind.
  • An adjudication order that proceeds on a factually incorrect premise -- that no reply was filed when one in fact existed -- reflects a lack of application of mind and cannot be sustained.
  • The impugned order dated 30.12.2025 was set aside, with liberty granted to the respondents to proceed afresh against the petitioner in accordance with law.

Important Clarification

  • Where the Revenue itself concedes that an assessee's reply to a show cause notice was on record but was overlooked while passing the adjudication order, courts will set aside the order for non-application of mind without going into the merits of the tax demand, leaving the department at liberty to re-adjudicate after considering the reply.

Sections Involved

  • Section 74, CGST Act, 2017 - determination of tax not paid or short paid by reason of fraud, wilful misstatement or suppression of facts.
  • Rule 142(1), CGST Rules, 2017 - procedure for issuance of summary of show cause notice and demand.

Decision – In Favour of

The writ petition was allowed, setting aside the adjudication order; the disposal was with liberty to the department to proceed afresh, without a finding on the merits of the tax demand -- an outcome procedurally in favour of the Assessee at this stage, but not a final verdict on liability.

Case Details

Court: High Court of Punjab and Haryana at Chandigarh
Case No.: CWP-9446-2026 (O&M)
Coram: Justice Deepak Sibal and Justice Lapita Banerji
Date of Order: 21.04.2026

Link to Download the Order

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