Tax Vista Your weekly tax recap Edn. 283 - 13th April 2026 Kasi Viswanathan V

 

 

A Detail-less Notice is No Notice

The present case addresses a fundamental issue in tax proceedings, namely, whether a show cause notice bereft of details can at all be regarded as a valid notice in law. The Petitioner challenged the impugned notice on the ground that it merely contained allegations, purportedly based on observations of the CAG in a special audit, without disclosing any underlying material or basis.

 

The Respondent clarified that the observations were not of a CAG audit of the Petitioner, but of the State tax authorities. Admittedly, the audit report, on which reliance was placed, was never furnished to the Petitioner.

 

More importantly, even on a standalone basis, the notice merely set out allegations (summary) without any particulars. For instance, one of the demands simply stated "undischarged tax liability of Rs.4,74,719", without even indicating the head under which such liability arose. The High Court noted that in respect of all categories of demand raised in the notice the details of the allegations are not forthcoming. This formed the core grievance before the Court.

 

In this backdrop, the High Court held that the impugned notice was vague and bereft of material particulars, and consequently violative of principles of natural justice. The Court further examined the scheme of Section 73 and in particular Section 73(3), and found that 'details' are to be brought to the notice of the taxpayer.

 

Accordingly, the High Court set aside the impugned notice on the grounds that it proceeded on a wrong premise and, more fundamentally, that it was wholly devoid of the details necessary to constitute a valid show cause notice.

 

The expression "show cause" in section 73(1) itself necessarily implies that the assessee must be put to notice of the grounds, basis and details of the allegations. This requirement is intrinsic to the provision itself. In this context, reference, if required can also be drawn to section 75(7), which contemplates that, in the first place, grounds must be set out in the show cause notice. Even the statutory format of Form GST DRC-01 i.e. summary of the show cause notice, requires disclosure of the grounds of demand.

 

On this aspect, reference to section 73(3) to emphasize the requirement of "details" being brought to the notice of the taxpayer may not have been necessary. Section 73(3) operates in a different context, namely, issuance of a statement for subsequent periods where a notice has already been issued, and proceeds on the legislative presumption that the grounds remain the same with only variation in quantum for the respective periods. The requirement of "details" therein refers to the amount of demand. In any event, even the summary of statement in Form GST DRC-02 requires mention of grounds.

 

The decision reiterates that a notice which merely quantifies, without disclosing the grounds, does not meet the statutory threshold of a 'show cause notice'  [Re: 2026-VIL-325-P&H].

 

No Request, No Hearing?

The present case examines whether grant of personal hearing under Section 75(4) is contingent solely upon a request by the taxpayer. The Petitioner was issued Form ASMT-10 dated 20.04.2022 alleging wrong availment/utilisation of ITC. Replies appear to have been submitted, though not acknowledged. Thereafter, a show cause notice dated 07.06.2022 was issued, to which no reply was filed. No personal hearing was granted, and an order-in-original came to be passed on 28.07.2022.

 

The Petitioner challenged the same on the ground of violation of principles of natural justice, contending that no personal hearing, as contemplated under section 75(4), was granted. It was further contended that there was a violation of Rule 142, inasmuch as summary of the order in Form DRC-07 was not properly uploaded, and consequently, the order could not be regarded as a valid order under section 73, thereby depriving the Petitioner of the appellate remedy.

 

The High Court, having regard to the language of section 75(4), found that the Petitioner was required to demand a personal hearing. It was observed that a taxpayer who has not even responded to the show cause notice cannot expect that a personal hearing would be granted. The Court further held that the proper officer cannot presume that the taxpayer is interested in availing a personal hearing in the absence of any response. Accordingly, it was held that there was no violation of section 75(4). The writ petition was also dismissed on the ground that the Petitioner had not availed the appellate remedy within the condonable period, though liberty was granted to file an appeal along with an application for condonation of delay.

 

The above reasoning, in so far as it proceeds on the basis that grant of personal hearing is dependent upon a request, may require reconsideration. A plain reading of section 75(4) indicates that it consists of two limbs separated by the conjunction "or", signifying disjunct conditions. The provision contemplates grant of personal hearing where a request is received, or where any adverse decision is contemplated against the taxpayer. These operate as independent triggers. Thus, regardless of whether a request is made or not, once an adverse decision is contemplated, the requirement of granting a personal hearing stands attracted. This position has also found support in judicial precedent, illustratively in IFGL REFRACTORIES LIMITED [2025-VIL-739-CAL].

 

As regards the dismissal of the writ petition on the ground of approaching the Court after expiry of the period available for availing the alternate remedy (beyond the condonable period), the same is in line with the settled position laid down by the Supreme Court in GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020-VIL-18-SC].

 

However, in the absence of any specific direction for condonation, it remains unclear as to how the liberty granted to file an appeal or to avail the further remedy of approaching the Tribunal would effectively assist the Petitioner [Re: 2026-VIL-336-MP]

 

[Read previous edition dated 07.04.2026]

 

(The views expressed are personal. The author can be reached for feedback or queries on v.k.vishwa@gmail.com)