A Strong message to adjudicating officers

By simply issuing a show cause notice and when no reply is received from the taxpayer,  passing the adjudication order without ensuring whether SCN was effectively served on the taxpayer and whether the opportunity of personal hearing was granted but not opted by taxpayer, no useful purpose is served when the taxpayer knocks the doors of the jurisdictional high court.

It was held almost in all cases wherever the taxpayer approached the jurisdictional high courts on the ground that the opportunity of personal hearing was not granted and the orders were passed in violation of principles of natural justice, the ex party orders were set aside. As no useful purpose is served for revenue when the adjudication order is set aside, the officers adjudicating such orders must learn the lesson and pass orders in such a manner that there is no scope for the adjudication order being set aside at a later date on any ground by the jurisdictional high courts.

The field formations across all states in India have not yet realized the fact that the jurisdictional high courts are spending huge time as well as efforts in dealing writs filed on matters relating to GST due to the fact that day in and day out, and  numerous orders  being passed under 129, 130, 73 and 74 of the CGST Act were held subsequently as being passed without application of mind by the jurisdictional high courts and quashed.

Unfortunately, even the Supreme Court is not spared from GST cases and most of the Special Leave Petitions being filed under GST are from Revenue Side. It is high time that SLP may be filed only after analyzing the possibility of success of the case based on merits as the success rate of Revenue on SLPs is very poor. Even review petition filed against orders passed on SLP go against revenue in several cases.

The High Court of Karnataka had an occasion to deal an interesting issue  pertaining to  GST on 23/07/2025. The petitioner paid GST under RCM for the transactions took place during 2018-19 in the year 2019-20. As the ITC was not matching in GSTR 2 and GSTR 3 of the petitioner, department issued SCN. The petitioner could not reply and adjudication order was passed on 20/08/2024. This issue was examined in depth by the high Court and after listening to the counsel of both the parties, the Court passed order in the matter of Sri. Nanjundeswara Traders Vs Commissioner of Commercial Taxes and other  in WP 20240 of 2025 by setting aside the adjudication order.

The CRUCIAL portion of the High Court order is furnished for ready reference.

 “all the necessary details and records are available with the respondents which could have been considered irrespective of whether petitioner had replied to the show-cause notice or not and the reconciliation of the accounts made. This reconciliation would not require the reply of the petitioner and/or the explanation of the petitioner, since all the documents are available with the respondent”.

The High Court has passed the above observations after dealing so many similar cases and after careful thought. Based on the above reasoning which are to be made use in each and every subsequent cases on identical matters, this issue may get closed sooner or later.

It may  be concluded that there is no need for issuing SCN based on the differences between two GSTR as it is going to be a burden not only on the taxpayer but the revenue has to pass  order which is most likely to be quashed subsequently  and remitted for reconsideration by the jurisdictional high court.

Tax professionals may attach the copy of the high court order dated 23/07/2025 wherever the same is applicable while filing the reply to SCN itself.