Show Cause Notice Challenge Relegated to Adjudication

Case Title: Abdul Saleem v. Assistant Commissioner, Anti-Evasion
Court: High Court of Kerala at Ernakulam
Petition No.: WP(C) 1711 of 2025
Date of Judgment: 16 January 2025
Category of Dispute: Validity of Show Cause Notice (Fake Invoices/ITC fraud)
Relevant Sections:

• Section 127, CGST Act, 2017 – Power to issue show cause notice

• Section 122(1)(a), CGST Act, 2017 – Penalty for issue of invoice without supply (effective 01.01.2021)

• Article 226, Constitution of India – Writ jurisdiction

Facts of the Case (Para 1–2)

• The petitioner was served with a show cause notice dated 16.10.2024 under Section 127 of CGST/SGST Act for allegedly conspiring with others to issue fake invoices without supply of goods using another entity’s GST registration, thereby enabling fraudulent ITC and tax evasion. (Para 1)

• Petitioner contended that Section 122(1)(a) came into force only from 01.01.2021; hence, he could not be proceeded against for the period October 2019 – March 2020. (Para 2)

• It was further argued that petitioner was not a taxable person as per the SCN, and therefore the proceedings lacked jurisdiction. (Para 2)

Question(s) in Consideration (Para 2–4)

1. Whether a writ petition under Article 226 is maintainable to quash a show cause notice under GST?

2. Whether invocation of Section 122(1)(a) for a period prior to its enforcement is legally sustainable?

Observation of Court (Para 3–6)

• The Court held that petitioner has a statutory remedy of filing objections and seeking adjudication on merits. (Para 3–4)

• Reference was made to Shanthanu Sanjay Hundaikari v. Union of India [2024 (89) GSTL 62], but distinguished since that case involved an employee being prosecuted for acts of the company, which is factually different. (Para 4)

• Relying on Union of India v. Vicco Laboratories [(2007) 13 SCC 270], the Court reiterated that interference at SCN stage is rare, unless jurisdictional error or abuse of process is apparent. (Para 5)

• The issues raised required factual adjudication, thus not suitable for writ intervention. (Para 6)

Judgment of Court (Para 7)

• The writ petition was dismissed, and petitioner relegated to file objections before adjudicating authority within two weeks. (Para 7)

• Adjudicating authority directed to consider such objections in accordance with law.

Between Fine Lines (Simplified Outcome in 5 Lines)

1. The High Court refused to quash a GST show cause notice at the pre-adjudication stage.

2. The Court emphasized that writ jurisdiction cannot be routinely invoked against SCNs.

3. The petitioner must first file objections and participate in adjudication.

4. Challenge to retrospective application of Section 122(1)(a) must be raised before the authority.

5. Extraordinary remedy under Article 226 is reserved only for rare, exceptional cases.

Summary of Referred Cases

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