Order Date – 11 February 2025

Parties: Eastland Switchgears Pvt. Ltd. & Anr. Vs The Assistant Commissioner of Revenue, Colootola and Ezra Street Charge, WBGST & Ors.

Facts –

• The Petitioner,  Eastland Switchgears Pvt. Ltd. & Anr., was served with a  show-cause notice was issued after a discrepancy memo dated September 20, 2024, regarding the period from April 1, 2020, to March 31, 2021.
• The appellants submitted a reply to the discrepancy memo on September 30, 2024. A final audit report was issued on October 4, 2024, under Section 65(6) of the CGST Act. The appellants submitted a response to the final audit report on October 21, 2024.
• The adjudicating authority acknowledged the reply but issued the show-cause notice without explaining why the appellant’s response was unsatisfactory and dismissed the writ petition, asking the appellants to participate in the adjudication process.

Issue –

• Whether the show-cause notice issued under Section 73 of the CGST Act was valid and properly reasoned?

Order –

• The Divisional Bench of Hon’ble High Court observed that it is settled legal proposition that a show-cause notice should be specific as to the role of the assessee and as to what passes in the mind of the adjudicating authority, which, in its prima facie view is against the assessee.  If the show-cause notice does not satisfy these conditions, the notice will be termed as ‘unspecific’ and ‘vague’ thereby denying opportunity to the assessee to put forth an effective reply.
• It will be incumbent upon the adjudicating authority, while issuing show-cause notice to record reasons for its finding. Undoubtedly, this will be a prima facie finding. However, in the instant case, the adjudicating authority, though referred to the reply submitted by the assessee dated October 21, 2024 to the final audit report drawn under section 65(6) in GST ADT-02, the same has not been dealt with.
• Hence the matter remanded to the adjudicating authority to issue a fresh show-cause notice recording reasons as to why in his/her prima facie view, the reply dated October 21, 2024 or the other documents, which are enclosed in the reply or which were submitted earlier, are not to the satisfaction of the adjudicating authority.