TaxTMI 
TaxTMI 
2026 (9) TMI 1653
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....ed by the revenue in the registered office of the taxpayer at Bachamari Govt. Colony, Old Malda in Malda District of West Bengal on 18.11.2021. The taxpayer was found engaged in wholesale of Zarda, Pan Masala, Mamy Poko Pants, Neutrella (Soya Nuggets), etc. Allegedly, the taxpayer was found maintaining the records of outward supplies of Pan Masala and Zarda on scrap papers instead of maintaining proper record. To the query of the inspecting team, the taxpayer replied that all these incriminating materials belonged to M/s Tribedi Uddoge and he had no connection with M/s Tribedi Uddoge. The revenue, apart from seizing said scrap papers, also seized electronic devices viz. pen drives from the possession of the taxpayer and based on those inputs detected tax evasion of huge amount on the part of the taxpayer. But no show cause notice was issued to the taxpayer. [4]. Instead, the revenue issued summons to the taxpayer to appear at the office of the revenue on 02.01.2022. The taxpayer did not turn up on that date. On a later date on 29.01.2022, he appeared before the concerned officer of the revenue and submitted that illness prevented him from appearing before the adjudicating author....
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....at there was no entity in the name of Tribedi Trader or Tribedi Uddoge as contended by the taxpayer. The inspecting team conducted search and seizure in the office of the taxpayer and seized the incriminating materials viz. scrap papers, pen drives etc. [9]. The first appellate authority dismissed the appeal and held that the taxpayer was liable to pay tax along with interest and penalty and attributed the following liability to the taxpayer : "In view of the above facts & findings as well as nugatory grounds of appeal, I am of the unhesitant opinion that the instant appellant has, with a reason of fraud, made the suppression of outward supply of the goods of 'Zarda & Pan Masala' for Rs.4256414.00 [4275900.00 (unearthed)-19486.00 (Disclosed in Return for ME-MARCH-2022)]. Hence, I take the plunge to modify the said Order of Demand in FORM-GST-DRC-07(Vide-Order Reference No.ZD190322014597D, Dated-28.03.2022) passed by the Assistant Commissioner of Revenue/Bl-North Bengal/Raiganj Zone (hereinafter referred to as the "adjudicating authority") with addition of levying of Interest as under:- Particulars Central tax (@14%) State/UT tax (@14%) Integ....
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.... as well as the first appellate authority had taken into consideration all relevant aspects and decided the case on merit and as such there is no reason to interfere with the findings. Mr. Roy Chowdhury urged for dismissal of the appeal. [12]. The sole question which arises for our consideration is whether the proceedings against the taxpayer can survive without a show cause notice (hereinafter SCN) having been issued to him. [13]. Undisputedly, no SCN seems to have been issued in this case. In the case in hand, it would appear that the amount of tax and penalty was determined by the adjudicating authority in terms of Section 74(9) of WBGST Act, 2017). Section 74(9) of West Bengal Goods and Services Tax Act, 2017 (hereinafter called WBGST Act, 2017) mandates that the proper officer shall issue an adjudication order determining the amount of tax, interest and penalty only after considering the representation of the taxpayer. For providing the opportunity to the taxpayer to submit such representation, sub-Section (1) of Section 74 CGST Act, 2017 which is in pari materia with Section 74(1) of the WBGST Act, 2017, mandates that the proper officer shall have to serve notice on the....
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....rt of Gujarat to understand the importance of the show cause notice in such proceedings from the right perspective, which reads as under: 7.2. As rightly pointed out by the petitioners, the only ground assigned for proposing the rejection of the claim for refund is the "others" with a remark that "error in adjusted total turnover." It is surely and rightly has been termed as a show cause notice which is completely vague and lacks the fundamental details which otherwise is required to be given for anyone to comprehend the same. A notice since is a foundation of any proceedings and if the same is not clear and is vague, the very edifice is extremely weak and based on such hollow foundation, when an attempt is made to raise a superstructure, the same cannot be sustained. x x x x x x 7.6. Not only the show cause notice lacks the clarity and requisite material necessary to meet with the same, the order impugned is also in clear violation of the settled cannon of law. Lack of reasons in the show cause notices has not enabled the parties to make an effective representation and file the reply nor would the grant of personal hearing for contesting such show cause ....
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....7 as discussed in the preceding paragraphs and the judgments of the Hon'ble Gujarat High Court and that of the Hon'ble Supreme Court of India cited to supra, it would transpire that a communication in any other form cannot substitute the statutory show cause notice which is a mandatory requirement of law and such show cause notice must indicate the amount demanded, background facts and all other necessary details so as to enable the taxpayer to make an effective representation against such notice. [19]. In the present case, it would appear that the demand was created under Section 74 of the WBGST Act for evasion of tax by suppression of facts and tax was determined in terms of sub-Section (9) of Section 74 of the said Act. The Hon'ble Supreme Court in a recent judgment delivered on 25.08.2026 in the case of M/S Tata Steel Limited vs Union of India through the Secretary, Ministry of Finance and others, in which a demand was created under Section 74, CGST Act, 2017 has held that the foundational facts which led the assessing officer to arrive at the inference of fraud/ wilful misrepresentation/ suppression should be evident from the notice itself. In paragraph 14 of the judgment, ....
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.... to why the duty not levied/not paid or short levied/ short paid should not be recovered from the noticee with interest and penalty, if applicable. Similarly, a show cause notice can also be issued for recovery of refund erroneously paid by the Government to the taxpayer. 2.1 Show Cause notice (SCN): Show Cause Notice (SCN) is the starting point of any legal proceedings against the party. It lays down the entire framework for the proceedings that are intended to be undertaken and therefore it should be drafted with utmost care. Issuance of SCN is a statutory requirement and it is the basic document for settlement of any dispute relating to tax liability or any punitive action to be undertaken for contravention of provisions of Central Excise Act and the rules made thereunder. A SCN offers the noticee an opportunity to submit his oral or written submission before the Adjudicating Authority on the charges alleged in the SCN. The issuance of show cause notice is a mandatory requirement according to the principles of natural justice which are commonly known as audi alteram partem which means that no one should be condemned unheard. 2.2 Structure of SCN: A SCN should i....