Case Title, Court, Petition No., Category, Date
DS Chewing Products LLP v. State of U.P. & Others
High Court of Judicature at Allahabad
Writ Tax No. 2295 of 2024
Category: Input Tax Credit / Validity of Demand Proceedings
Date of Order: 18 December 2024
Relevant Section(s): Section 73 of CGST Act, Rule 142(1A) of CGST Rules, Article 226 of the Constitution
Facts (Para 1–3)
The petitioner, DS Chewing Products LLP, was subjected to a tax liability imposed by the Assessing Authority under Section 73 of the CGST Act. It was argued that the mandatory pre-show cause notice in Part A of Form DRC-01A, required under Rule 142(1A) as applicable in 2020, was not issued. Instead, the authority directly proceeded to pass the order dated 03.11.2020. The petitioner relied upon the Division Bench judgment in Skyline Automation Industries v. State of U.P. (Writ Tax No. 1512/2022, decided on 02.01.2023), wherein similar proceedings were quashed for want of such notice. The petitioner also pointed to Gulati Enterprises (Delhi HC) on identical facts.
Since no GST Tribunal has been constituted, the petitioner approached the High Court under Article 226, having already deposited 10% of the disputed tax at the appellate stage, and expressed willingness to deposit an additional 10% if required.
Questions of Law (Para 2–3)
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Whether proceedings initiated under Section 73 of the CGST Act are invalid if the mandatory pre-show cause notice in Form GST DRC-01A was not issued prior to the show cause notice?
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Whether subsequent proceedings, including appellate orders, can survive if the initiation itself is defective?
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Whether the petitioner can seek relief directly before the High Court in absence of the constitution of GST Appellate Tribunal?
Observations (Para 2, 5)
The Court noted that the Skyline Automation Industries ruling clearly held that initiation of proceedings without issuance of Form DRC-01A was contrary to law as it stood prior to the amendment of Rule 142(1A) (15.10.2020). Subsequent reminders or issuance of final orders cannot cure this fundamental defect. The Court also took note that the petitioner had already complied partially by depositing 10% of disputed tax and undertook to deposit an additional 10%, thereby justifying interim protection.
Judgement / Interim Order (Para 4–8)
The High Court admitted the writ petition for consideration and granted an interim stay on the effect and operation of the orders dated 03.11.2020 (Assessing Authority) and 05.09.2024 (Additional Commissioner (Appeal-III), Noida). The stay was made conditional upon the petitioner depositing an additional 10% of the disputed tax liability within three weeks. In default, the interim protection would lapse. The matter was listed for 13.02.2025 for further hearing.
Case Law References in Judgment
| Case | Citation / WP No. | Ratio Decidendi |
|---|---|---|
| Skyline Automation Industries v. State of U.P. | Writ Tax No. 1512 of 2022 (Allahabad HC, 02.01.2023) | Held that absence of pre-show cause notice in Form DRC-01A under Rule 142(1A) renders proceedings under Section 73 invalid. |
| Gulati Enterprises v. Commissioner | Delhi HC | Show cause notices issued without Form DRC-01A prior to 15.10.2020 amendment are invalid and proceedings must be quashed. |
Between Fine Lines
For taxpayers, this ruling reinforces that any GST demand initiated prior to 15.10.2020 without issuing a pre-show cause intimation in Form DRC-01A is fundamentally defective. Even if orders have been passed and appeals decided, such proceedings cannot stand. Businesses facing such demands can challenge them directly before the High Court, especially in the absence of a functioning GST Appellate Tribunal, provided they comply with the condition of partial pre-deposit.
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