Show-cause notice on tax liability cannot trigger coercive recovery before final adjudication by the competent authority.

The impugned communication was treated as a show-cause notice requiring the taxpayer to to proposed tax liability, input tax credit curtailment, and proposed penalty, rather than as a final quantified demand. The taxpayer was allowed to raise all legal and factual objections before the competent authority, including objections to initiation of proceedings and penalty. Coercive recovery was restrained until the authority heard the taxpayer and passed a final decision on the notice.

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Issues: Whether the impugned communication was only a show-cause notice and not a final demand, and whether coercive recovery could be undertaken before the competent authority decided the matter finally.

Analysis: The communication was treated as a notice requiring the petitioner to answer the proposed tax liability, curtailment of input tax credit, and proposed penalty. The amount mentioned therein was not regarded as a final quantified liability. The petitioner was permitted to raise all legal and factual objections, including objections regarding the initiation of proceedings and penalty, before the competent authority, which was to decide the matter after hearing the petitioner. Until such final decision, recovery action was restrained.

Conclusion: The impugned communication was not treated as a final demand, and coercive recovery was barred until the competent authority adjudicated the notice after hearing the petitioner.

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