Challenge to show cause notice under GST: court declines interference but preserves crossexamination and rebuttal rights.

Challenge to a show cause notice under the GST framework raises disputed factual issues requiring full adjudication; the HC declined to interfere at the initiation stage because no final adverse conclusion exists, but held that the petitioner cannot be compelled to deposit proposed amounts before adjudication. The court recognised the revenue's reliance on recipient statements and documentary records (RUDs) but ensured the petitioner's right to crossexamine those witnesses and to rebut the reliability and inferences drawn from such documents. The matters must be examined on both facts and law during the adjudication process.

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Issues: Whether interim judicial interference should be granted to quash or suspend the show cause notice issued under Section 74(1) of the Central Goods and Services Tax Act, 2017 (and corresponding provisions of the U.P. GST Act, 2017 and Section 20 of the IGST Act, 2017) pending adjudication.

Analysis: The petition was filed at the initiation of adjudication proceedings and no final conclusion has been reached by the adjudicating authority. Investigation including search and recording of recipient statements has taken place and the revenue seeks to rely on those materials and witnesses. Disputed questions of fact and law arise which require full adjudication; the petitioner has avenues within the adjudication to challenge documentary material and to cross-examine witnesses. Given the factual disputes and the need for an adjudicatory process to examine evidence and afford opportunity to test witness statements and documents, the matter is better resolved in the course of statutory adjudication rather than by pre-emptive judicial intervention.

Conclusion: Interim interference is declined and the writ petition is dismissed; the order upholds the continuance of the adjudication proceedings and is therefore against the petitioner and in favour of the revenue.

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