In a significant ruling reinforcing the principles of natural justice under the Goods and Services Tax (GST) regime, the Allahabad High Court has held that GST authorities must issue a well-reasoned and self-contained final order, even if the taxpayer fails to respond to a Show Cause Notice (SCN).
Background of the Case
The judgment came in response to a writ petition filed by M/s Shakil Ahmad Security Agency challenging a demand order dated April 27, 2024, issued under Section 73 of the CGST Act, 2017. The petitioner argued that the impugned order lacked justification and failed to meet the mandatory requirements laid out in Section 75(6) of the Act, which mandates that a final GST order must detail the relevant facts and provide a clear rationale for the demand.
Court’s Observations
The division bench, comprising Chief Justice Arun Bhansali and Justice Kshitij Shailendra, sided with the petitioner. The court reiterated its earlier stand taken in the case of M/s Hari Shanker Transport vs. Commissioner of Commercial Tax, U.P., emphasizing that simply referring to the issuance of notices does not satisfy the legal requirement of issuing a speaking order.
The court highlighted that the GST officer failed to discuss the specific facts, taxpayer conduct, or any independent findings, and merely cited the issuance of SCNs as justification for the demand—rendering the order legally insufficient.
Mandate Under Section 75(6) of GST Act
Referring to Section 75(6) of the GST Act, the bench underlined that even when a taxpayer does not reply to a Show Cause Notice, the GST authorities are legally obligated to pass a well-reasoned, fact-based final order. The absence of a taxpayer response does not relieve the proper officer from the statutory duty to justify the demand through a detailed explanation.
High Court’s Decision
The court quashed the demand order dated April 27, 2024, and directed the GST department to provide the petitioner a fair opportunity to respond to the SCN within four weeks. Subsequently, the proper officer is required to issue a fresh, reasoned, and speaking order after affording the petitioner a personal hearing.
Case Details:
- Case Title: M/s Shakil Ahmad Security Agency vs. Deputy Commissioner State GST Ghaziabad
- Case No.: Writ Tax No. – 2249 of 2025
- Court: Allahabad High Court
- Judges: Chief Justice Arun Bhansali and Justice Kshitij Shailendra
- Order Date: April 27, 2024
Conclusion:
This landmark ruling by the Allahabad High Court reinforces the importance of procedural fairness in tax adjudication. It sends a strong message to GST officers that legal compliance and detailed reasoning in orders are not optional—even if the taxpayer fails to respond to the SCN.