TaxTMI 
TaxTMI 
TaxTMI 
Introduction: The adjudicating authorities, while passing the orders violate several provisions contained in the CGST Act/ CGST Rules. They normally act based on information generated through system on the cancellation of registration of the supplier and start blocking the corresponding ITC of the buyer in their electronic credit ledger who availed the ITC even without considering the fact that the ITC in question was rightly availed, fulfilled all required conditions and the registration cancellation took place at a much later date. There are several other violations, the major one being GROSS VIOLATION of Section 75(4) of the CGST Act on the principles of natural justice. In this article, it is proposed to discuss three different case laws where High Courts have set aside the orders passed by the adjudicating authorities.
Case 1: In an interesting case, The Allahabad High Court in the matter of M/s Suraj Kumar Upadhyay Versus State of U.P. And 2 Others - 2025 (7) TMI 994 - ALLAHABAD HIGH COURT vide para 9 of the order quashed the adjudication order as well as the order of the Additional Commissioner (Appeals).
The SCN was issued on 06/04/2022 which was duly replied on 19/04/2022. However, without considering the reply, registration was cancelled through order dated 20/04/2022. The first appellate authority also rejected the appeal, despite having merits. The operative portion of the order of the High Court is furnished below.
Para 11: The matter is remanded to the adjudicating authority, who shall issue fresh notice to the petitioner mentioning the reason of the proposed cancellation of registration within a period of one week from the date of production of certified copy of this order. The petitioner is directed to submit its reply within 15 days after receipt of the notice and after submitting the reply within time, the adjudicating authority shall pass reasoned and speaking order, within a period of two weeks thereafter, after affording due opportunity of hearing to the petitioner.
Case 2: In yet another order dated 14/07/2025, the Allahabad High Court in the matter of M/s Moringo Organics Private Limited Lko. Thru. Authorised Representative Senthil V Versus Addl. Commissioner Grade 2 Appeals State Tax Deptt. Lko. And Another - 2025 (7) TMI 993 - ALLAHABAD HIGH COURT held that there is violation of Section 75(4). In this case, the adjudicating authority passed order on 04/12/2023 even without affording any opportunity of personal hearing in gross violation of Section 75(4). The first appellate authority also passed adverse orders on 09/04/2025. The High Court set aside both the orders as the order in original was in violation of principles of natural justice and remanded the matter to the original adjudicating authority.
Case 3: In yet another very interesting case, the Allahabad High Court has ruled that the amount which is mentioned in the Show Cause Notice is the maximum amount that could be confirmed while passing the order as provided in Section 75(7). The sub section reads as the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice. In this case SCN amount was 24 lakhs whereas orders were passed confirming demand of 42 lakhs.
The operative portion of the order is furnished below.
11. Consequently, the writ petition is allowed. Order dated April 5, 2025(Annexure-1) is quashed and set aside and the matter is remanded back to the respondent no. 2 to provide an opportunity to the petitioner to file response to the show-cause notice and after providing opportunity of hearing, pass a fresh order in accordance with law.
This was the case of M/s Shri Ram Trading Company Situated Versus State of U.P. and Another - 2025 (7) TMI 790 - ALLAHABAD HIGH COURT.
Conclusion: Whenever any order passed by any adjudicating authority or first appellate authority is set aside or quashed by the Jurisdictional High Court, the sensitisation is required at the authorities level to ensure that they do not pass further orders which may also be quashed at a later date by the same High Court as there is already a precedence in existence.