The Science Behind Drafting a Reply To Show Cause Notice in GST: Part-1
Thoughts, Insight and Research by: Abhishek Raja Ram, 9810638155
Drafting a reply is a blend of Science and Art. Today, we delve into the science behind it, where 2 + 2 always equals 4.
1. Check whether DIN is mentioned on SCN or not.
1.1 Circular No. 122/41/2019-GST: Any specified communication that does not bear the DIN and is not covered by the exceptions shall be deemed to have never been issued.
1.2 Circular No. 128/47/2019-GST: Quoting of DIN on any communication is compulsory.
1.3 Implementing a system for the e-generation of DIN for all communications sent by State Tax Officers to taxpayers would enhance good governance; the UOI/GST Council should issue advisory and instructions to States, and States should implement the DIN system. Supreme Court in Pradeep Goyal vs Union of India (2022) 63 GSTL 286
2. Show Cause Notice should be specific and not vague.
2.1 Sec. 160: Assessment Proceedings cannot be held invalid if the communication is acted by the taxpayer.
2.2 instruction No. 02/2022-GST: While issuing the Notice, the Proper Officer, as far as possible, QUANTIFY THE AMOUNT of demand in relation to the discrepancies. Discrepancies so communicated be SPECIFIC in nature and not vague or general.
2.3 SCN is foundation on which the Department has to build up its case - If allegations in show cause notice are not specific and, on the contrary, vague, lack details and/or are unintelligible, sufficient to hold that noticee not given proper opportunity to meet allegations indicated in show cause notice. Supreme Court in Brindavan Beverages Pvt. Ltd. (2007) 213 ELT 487
2.4 Cryptic and improper notice issued without detailing allegations attracting ingredients of provisions of Acts was not sustainable. Jharkhand High Court in NKAS Services Pvt. Ltd. (2022) 63 GSTL 18
Author's view:
Therefore, be careful while replying SCN, it if does not specify the charges or allegations behind the SCN, then one may avoid replying the SCN. Instead, the SCN should be challenged based on the fatal deficiency it suffers. While challenging the SCN, one should take the shelter of Section, Instructions, Case Laws etc.
3. Time period to file reply and Opportunity of Being Heard in SCN
3.1 Principles of Natural Justice demand that before passing of any adverse order, the Person should be heard.
3.2 Sec. 75(4): An opportunity of hearing shall be provided to any person where any adverse decision is contemplated against such person.
3.3 Registration cannot be cancelled based on a SCN that gives no details as to the date and time on which the petitioner’s authorized representative was to present himself for a personal hearing, before the adjudicating authority. Delhi High Court in Fada Trading Pvt. Ltd. (2022) 64 GSTL 95
3.4 Where the Adjudicating Authority passed an impugned order, creating demand even before the due date for filing a reply as stipulated in the SCN, the impugned order was not sustainable and was to be quashed.
Delhi High Court in Mitchem Impex (2024) 88 GSTL 244
This was part-1 of this series. I hope you must have find this write up useful.
Thanks & Regards
Abhishek Raja Ram
9810638155
