GST notice defect does not vitiate recovery unless actual prejudice or denial of defence is shown.

A procedural lapse in issuing a separate GST recovery notice did not invalidate the demand where the audit report and grounds of recovery had already been supplied in detail. The petitioner was held to have full knowledge of the allegations, including the basis of the proposed tax recovery, and was not taken by surprise. Applying the settled prejudice principle in natural justice matters, the Court held that a mere technical infraction does not vitiate proceedings unless actual prejudice or denial of an effective defence is shown. On that basis, the objection to the missing notice failed and the demand was sustained.

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Issues: Whether the impugned demand could be invalidated for non-issuance of a separate show cause notice in the prescribed form when the audit report and grounds of demand were already supplied, and whether any procedural lapse caused prejudice to the petitioner.

Analysis: The petitioner challenged the demand mainly on the ground that the statutory procedure contemplated a notice under Sections 73(1) or 74(1) of the Himachal Pradesh Goods and Services Tax Act, 2017 read with Rule 142(1) of the Himachal Pradesh Goods and Services Tax Rules, 2017, whereas only the summary in GST DRC-01 had been issued. The audit report, however, set out the discrepancies and the basis of the proposed recovery in detail, including the alleged excess credit and the statutory provisions said to have been contravened. The Court held that the petitioner was fully aware of the case it had to meet and was not taken by surprise. Applying the settled prejudice principle in natural justice matters, the Court held that a mere procedural infraction does not vitiate the order unless it has caused real prejudice or deprived the party of an effective defence. The attempt to rely on the missing notice was therefore treated as a technical objection without substantive consequence.

Conclusion: The objection based on non-issuance of the separate notice failed, and the demand was held to be sustainable against the petitioner.

Final Conclusion: The writ petition was found to be devoid of merit, and the impugned demand was left undisturbed.

Ratio Decidendi: A procedural lapse in the issuance of notice under the GST recovery process does not invalidate the adjudication unless the affected party shows actual prejudice or denial of an effective opportunity to defend itself.

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