The Calcutta High Court has granted interim relief to a real estate developer by staying a GST assessment order after finding a prima facie case that the tax authorities may have violated principles of natural justice by issuing a show cause notice before the expiry of the time granted for responding to a pre-notice intimation. 

The bench of Justice Smita Das De observed that the central question requiring adjudication was whether the challenged show cause notice would lose its significance and become infructuous merely because an assessment order had subsequently been passed during the pendency of the writ petition.

The petitioner/assessee  challenged the legality and validity of a show cause notice issued in Form GST DRC-01 by the Directorate General of GST Intelligence (DGGI), Kolkata Zonal Unit. The company argued that the proceedings were initiated in a mechanical and arbitrary manner, contrary to the procedure contemplated under Rule 142(1A) of the CGST Rules, 2017. 

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According to the petition, the taxpayer received an intimation in Form GST DRC-01A on September 25, 2025, granting time until September 29, 2025, to submit its response. However, the final show cause notice in Form GST DRC-01 had already been issued on September 27, 2025—two days before the deadline for filing a reply to the intimation expired. 

The petitioner contended that this demonstrated undue haste on the part of the authorities and showed a complete lack of consideration of the taxpayer’s response. The company maintained that it had duly filed its reply on September 29, 2025, but the authorities had proceeded without waiting for or examining the same. 

The case also involves a dispute regarding the treatment of payments already made by the taxpayer during the investigation stage. The petitioner submitted that it had paid ₹2.24 crore through Form GST DRC-03 on June 13, 2025, comprising IGST, CGST and SGST components. However, the authorities allegedly failed to appropriate this amount against the total tax demand of ₹2.70 crore. 

The taxpayer further argued that the classification of taxes reflected in Forms GST DRC-01A and DRC-01 was erroneous and inconsistent with the available records. 

While the writ petition challenging the show cause notice was pending before the High Court, the GST authorities proceeded to pass an assessment order on March 24, 2026. The petitioner argued that even after making voluntary payments through Form GST DRC-03, the authorities confirmed the demand without granting appropriate adjustment of the amount already deposited. 

Appearing for the tax department, counsel argued that issuance of Form GST DRC-01A is merely an intimation and not a mandatory statutory requirement. The department relied on Section 74(5) of the CGST Act, 2017, contending that the legislative scheme does not make DRC-01A a compulsory prerequisite before issuance of a show cause notice. 

The department also argued that the writ petition had become infructuous after the assessment order was passed and that the petitioner had an effective alternative remedy through an appeal under Section 107 of the CGST Act. Therefore, the department contended that the writ petition itself was not maintainable. 

The petitioner relied on judicial precedents, including the Bombay High Court’s decision in Himesh Foods Pvt. Ltd. v. Union of India and a previous coordinate bench decision of the Calcutta High Court in Babylon Trading and Investment Private Ltd. v. Union of India and Others, to support its challenge to the GST proceedings. 

The Court found that the petitioner had made out a case warranting interim protection and accordingly stayed the operation of the assessment order dated March 24, 2026. The stay will remain in force until September 30, 2026, or until further orders of the Court, whichever is earlier. 

The High Court directed the respondents to file their affidavit-in-opposition within four weeks, with the petitioner being granted three weeks thereafter to file its reply. The matter has been directed to be listed in the monthly list of September 2026 for further consideration.

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