AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
Most of the tax officials both at adjudication as well as first appeal level pass highly adverse orders forcing the taxpayer for litigation irrespective of the fact as to to whether they are State Officers or Central Officers. Unfortunately, almost officers from all the state pass orders by ignoring the basic requirements such as effective communication of SCN, opportunity of personal hearing etc. For many taxpayers there is no option available other than to litigate. One of the enthusiastic officer from the State of Punjab has not only erred in SCN but also in OIO as well as on recovery front. The words erred, impermissible as well as illegal are used in this article as these are the views of the High Court and not that of the author of the article.
The State Tax officer has crossed his limits not on just one aspect but on three and let us examine the violations in a detailed manner so as to help the tax officials to pass more reasoned orders strictly in adherence with the extant provisions contained under three different sections as detailed in the following paragraphs in future.
Issue 1). There are at least one hundred decisions passed by the respective jurisdictional high courts that a mere compliance of serving the show cause notice in one of the modes as provided under section 169 of the CGST/SGST Act but the service should be an effective one. In most of the cases, mere posting on the additional notices column of the GST portal was held as insufficient and courts have ruled that the purpose of issuing the show cause notice is that the same must reach the taxpayers. The legislature after careful thought not only laid down the modes but the mode of service is sequenced in such manner that try a and only in case a fails try b. In case a and b both fails try c and so on and so forth till e and in case only when all the five a to e fail simultaneously, try f after recording the reasons. The section is simply reproduced below for the benefits of all concerned.
Section 169. Service of notice in certain circumstances. -
(1) Any decision, order, summons, notice or other communication under this Act or the rules made thereunder shall be served by any one of the following methods, namely: -
(a) by giving or tendering it directly or by a messenger including a courier to the addressee or the taxable person or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxable person; or
(b) by registered post or speed post or courier with acknowledgement due, to the person for whom it is intended or his authorised representative, if any, at his last known place of business or residence; or
(c) by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or
(d) by making it available on the common portal; or
(e) by publication in a newspaper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain; or
(f) if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence and if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the office of the concerned officer or authority who or which passed such decision or order or issued such summons or notice.
(2) Every decision, order, summons, notice or any communication shall be deemed to have been served on the date on which it is tendered or published or a copy thereof is affixed in the manner provided in sub-section (1).
(3) When such decision, order, summons, notice or any communication is sent by registered post or speed post, it shall be deemed to have been received by the addressee at the expiry of the period normally taken by such post in transit unless the contrary is proved.'
The officer has simply choose to affix the SCN and the high court has held this as impermissible.
Issue 2) As against the SCN issued under Section 74A covering the period from June 2025 to August 2025. As against the SCN issued on 10/12/2025, the adjudication order was passed on 14/01/2026 itself in gross violation of Section 74A (7) which gives an upper time limit of twelve months from the date of SCN. Thus the OIO was passed in a hurried manner without allowing the taxpayer sufficient time to reply the SCN as well as appear the personal hearing.
Issue 3) Recovery. Section 78 stipulates a minimum time period of three months for a taxpayer to pay the amount as per OIO in case he wishes the settle the issue at adjudication level without going for first appeal, in this case the State officer has erred in initiating the recovery bon the same day of OIO.
Crucial paras of the order passed by the High Court of Punjab and Haryana in the matter of Suvida Traders on 29/04/2026 in CWP 12924 of 2026 as reported in 2026 (5) TMI 1082 are as below:
10. Even the recovery made on 14.01.2026, in pursuance to the demand order dated 14.01.2026, by way of debiting of ITC lying in the petitioner's Electronic Cash Ledger is found to be illegal as the same was made on the very same day of the passing of the demand order as against the period of three months granted to the assessee under Section 78 of the Act for depositing the demanded payment especially when it is not disputed that prior to such recovery no reasons were recorded by the proper officer as required to be passed in terms of the proviso to Section 78 of the Act
11. In the light of the above discussion, the impugned demand order dated 14.01.2026 and the recovery made from the petitioner in pursuance to the demand on 14.01.2026 are both held to be illegal. Resultantly, the order dated 14.01.2026 is set aside with a direction to the State to refund the recovery made from the petitioner within a period of two weeks from the date of receipt of a copy of this order.
Let us conclude this article by expecting all GST officials all over India at all levels to pass orders which are not set aside or quashed at a later date by the jurisdictional high court. This is more important because when an order which is passed at adjudication level or at first appeal level is subsequently quashed are held as impermissible or illegal, the one and only beneficiary is the tax professional on the cost, time as well as efforts of GST officer as well as the taxpayer as both of them are at a loss. More than anything else, the GST officer who passes such illegal order must be made responsible as well as accountable for such wrong acts and these type of cases where three provisions are violated in one go must reach the attention of CBIC Chairman as well as Joint Secretary (Revenue) so as to enable them make necessary corrective measures to avoid such occurrences in future in order to minimise litigation as well as to encourage trade in ease of doing business.