2026-VIL-501-P&H
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SGST High Court Cases

GST - Demand Order and Recovery - Petitioner challenge the demand order raised under Section 74-A(1) read with Section 74-A(5)(ii) of the CGST Act, 2017 and the recovery proceedings initiated pursuant to the said demand order – HELD - The demand order is found to be illegal as no valid show cause notice was issued to the petitioner prior to raising the demand, as required under Section 74A of the GST Act. Additionally, the recovery made by debiting the input tax credit lying in the petitioner's Electronic Cash Ledger, is illegal as it was made on the same day as the passing of the demand order, in violation of Section 78 of the Act, which grants the assessee a period of three months to deposit the demanded tax. The proviso to Section 78 allows the proper officer to require the assessee to make the payment within a period less than three months, but only after recording reasons in writing, which was not done in the present case. Accordingly, the recovery made was also held to be illegal - The impugned demand order and the recovery made from the petitioner are set aside – The petition is disposed of - Show Cause Notice - Proper Service - The High Court held that the show cause notice was not validly served upon the petitioner as the mode of service through affixation was resorted to without first exhausting the other valid modes of service under Section 169 of the CGST Act, 2017. As per Section 74A of the Act, before any demand can be raised against an assessee, he is required to be served with a valid show cause notice, which is in line with the principles of natural justice. Since the notice was not validly served, the impugned demand order is declared to be illegal.
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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