SIB Report Not Supplied – GST Demand Order Quashed by High Court

Case Details:

• Case Title: Star Facilities Management Ltd. v. Deputy Commissioner, State Tax

• Court: High Court of Judicature at Allahabad

• Petition No.: Writ Tax No. 2344 of 2024

• Date of Judgment: 23.01.2025

• Section Involved: Section 74, CGST Act, 2017

• Category of Dispute: Violation of Principles of Natural Justice

Facts of the Case:

• [Para 1-2]: The petitioner challenged a demand order dated 05.11.2024 issued under Section 74 of the CGST Act, based on findings from a Special Investigation Branch (SIB) report for FY 2017–18. The petitioner had requested a copy of the SIB report in its reply to the show cause notice (SCN).

• [Para 3]: The department refused to provide the SIB report, arguing the petitioner had appeared during the SIB proceedings and hence was aware of the issues.

• [Para 4]: The petitioner contended that non-supply of the SIB report violated natural justice principles. Reliance was placed on Lari Almira House v. State of U.P. (Writ Tax No. 1569 of 2022, decided on 12.04.2023).

• [Para 5]: The department argued that the SCN was detailed and sufficiently conveyed the findings of the SIB, negating the need to share the report.

Questions in Consideration:

• [Para 6-7]: Whether non-supply of the SIB report, which formed the basis of the SCN under Section 74, violated principles of natural justice?

• Whether the demand order could stand without disclosing the foundational document (SIB report) to the assessee?

Observations of the Court:

• [Para 7]: The SIB report was the very foundation of the SCN; hence, a copy of the same should have been supplied to enable the petitioner to challenge or explain discrepancies.

• The mere narration of SIB conclusions in the SCN could not substitute the actual report, especially as the basis and method of reaching those conclusions remained unknown.

Judgment of the Court:

• [Para 8-10]: The impugned order was held to be passed in breach of natural justice and thus quashed.

• The matter was remanded back to the adjudicating authority with directions:

  • Supply the SIB report to the petitioner.

  • Grant a reasonable opportunity to respond to the SCN.

  • Provide a proper hearing and pass a fresh speaking order under Section 74 of the CGST Act.

Between Fine Lines (Simplified Summary):

1. The GST demand was based on an SIB report that wasn’t shared with the taxpayer.

2. The High Court held that withholding the report violated natural justice.

3. Just referring to report findings in the SCN is not sufficient.

4. The order was quashed and the matter sent back for fresh adjudication.

5. The department must now share the SIB report and allow full opportunity of defense.

Summary of Referred Cases:

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