High Court declines to quash GST show cause notice but permits assessee to raise jurisdictional objections and seek cross-examination before adjudicating authority.

Case: M/s Adhiraj Cements v. Principal Commissioner, CGST & Central Excise, Raipur & Ors.

High Court of Chhattisgarh, Bilaspur
WPT No. 29 of 2025
Date of Judgment: 12.06.2025
Category of Dispute: Validity of Show Cause Notice / Penalty under Section 122(1A) / Cross-examination rights
Relevant Sections: Sections 70, 74, 122(1A) of CGST Act, Rule 100(2), Rule 142(1)(a) of CGST Rules

Facts (Paras 3–4)

The petitioners, M/s Adhiraj Cements and its partner, faced searches in September 2020 at their business and manufacturing premises, where statements of employees were recorded under Section 70 of the CGST Act. Under alleged duress, the petitioners deposited tax liability of ₹6.37 crore. Later, Form DRC-01A intimation was issued under Sections 74 and 122(1A) covering April 2018–March 2021, followed by a show cause notice dated 28.03.2024. Petitioners filed a reply and sought cross-examination of witnesses whose statements were relied upon, but such opportunity was not given. They filed this writ petition seeking quashing of the notice, release of seized cash of ₹17.5 lakh, and cross-examination rights.

Questions before Court

1. Whether the show cause notice dated 28.03.2024 was without jurisdiction, as Section 122(1A) was introduced only from 01.01.2021 and not applicable to the earlier period.

2. Whether the notice was vague and hit by departmental circulars.

3. Whether writ jurisdiction under Article 226 can be invoked at the stage of show cause notice.

4. Whether petitioners were entitled to cross-examine departmental witnesses before adjudication.

Observations (Paras 5–8)

• Petitioners argued Section 122(1A) was inapplicable for the disputed period and relied on Sarva Shramik Sangh v. Indian Oil Corporation Ltd. (2009) 11 SCC 609 and CCE v. Brindavan Beverages (P) Ltd. (2007) 5 SCC 388 to stress vagueness of notices.

• Respondents contended writ was premature against a mere show cause notice, citing Kunisetty Satyanarayana (2006) 12 SCC 28 and Royal Trading Company (2005) 11 SCC 518. They emphasized the alternate statutory remedy.

• The Court noted that writ petitions against SCNs are generally not maintainable unless issued without jurisdiction. Reliance was placed on Kunisetty Satyanarayana (paras 14–15), holding that SCNs do not infringe rights until final order is passed.

• However, the Court accepted that petitioners could seek cross-examination by filing an appropriate application before the adjudicating authority. Petitioners were directed to file reply within 15 days and thereafter apply for cross-examination within 7 days, which the authority must decide in law.

Judgment (Paras 7–9)

The High Court refused to quash the show cause notice, holding writ intervention premature. It granted liberty to petitioners to raise all jurisdictional and legal objections before the adjudicating authority, including applicability of Section 122(1A). Petitioners were also permitted to seek cross-examination of witnesses in proper application. The writ petition was disposed of with these directions.

Table of Precedents Referred

Between Fine Lines

For businesses, this case reiterates that GST show cause notices cannot generally be challenged directly in writ courts. The right course is to reply, raise jurisdictional issues before the adjudicating authority, and seek cross-examination as per law. Writ relief may be considered only where SCNs are ex facie without jurisdiction. Thus, taxpayers must strategically respond at adjudication stage rather than expect immediate High Court intervention.

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