Show-cause notice under GST must record prima facie reasons after considering the assessee's audit reply.

A show-cause notice under section 73 of the CGST Act was considered deficient where, after audit proceedings, it referred to the assessee's reply but did not record why the adjudicating authority remained unsatisfied. The court reiterated that a notice must disclose the prima facie basis for the proposed demand so the assessee can give an effective reply. Because the authority did not deal with the reply to the final audit report under section 65(6) or state reasons for disagreement, the notice was interfered with and the matter was remanded for a fresh notice and adjudication after reasonable opportunity of hearing.

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Issues: Whether a show-cause notice issued under section 73 of the Central Goods and Services Tax Act, 2017 was liable to be interfered with for not recording the adjudicating authority's prima facie reasons after considering the assessee's reply to the final audit report under section 65(6) of the Central Goods and Services Tax Act, 2017.

Analysis: The notice arose after audit proceedings in which the assessee had responded to the discrepancy memo and also to the final audit report. The disputed notice referred to the reply filed by the assessee, but did not disclose why the adjudicating authority was not satisfied with that reply. A show-cause notice must indicate the basis of the prima facie view against the assessee so that an effective reply can be furnished. Since the authority did not deal with the reply to the final audit report or state reasons for its disagreement, the notice was found to be deficient.

Conclusion: The show-cause notice was interfered with to that extent, and the matter was remanded for issuance of a fresh notice recording reasons and for fresh adjudication after giving the assessee reasonable opportunity to reply.

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