The Punjab and Haryana High Court has granted interim protection to a taxpayer challenging the validity of the amendment made to Rule 142(1A) of the Central Goods and Services Tax (CGST) Rules, 2017. 

The petition raises an important legal issue regarding whether the substitution of the words “Proper Officer shall” with “Proper Officer may” in Rule 142(1A) is inconsistent with the mandate of Section 74(5) of the CGST Act, 2017. 

The writ petition contended that the amendment to Rule 142(1A) dilutes the statutory scheme envisaged under Section 74(5) of the CGST Act. According to the petitioner, the amendment transforms what was intended to be a mandatory pre-show cause consultation into a discretionary exercise, thereby defeating the object of encouraging voluntary tax compliance before initiation of formal adjudication proceedings. 

Taking note of the challenge, a Division Bench comprising Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor observed that the matter requires consideration and accordingly issued a notice of motion to the respondents. The State of Haryana accepted notice through its counsel and sought time to file its response. 

Importantly, the High Court granted interim relief to safeguard the interests of the petitioner during the pendency of the writ proceedings. While directing the petitioner to continue cooperating with the adjudication proceedings arising from the impugned show cause notice, the Court restrained the authorities from passing any final adjudication order until the writ petition is decided, unless such an order had already been passed before the interim directions were issued. 

The dispute assumes significance because Rule 142(1A) governs the procedure for communicating tax liabilities before issuance of a show cause notice under the GST regime. The amendment replacing the mandatory expression “shall” with the discretionary term “may” has been the subject of considerable debate among taxpayers and professionals, with many arguing that it weakens procedural safeguards intended to facilitate voluntary compliance and reduce unnecessary litigation.

The outcome of the case could have far-reaching implications for GST adjudication across the country. If the High Court ultimately holds that the amended Rule 142(1A) is inconsistent with Section 74(5) of the CGST Act, it may clarify the extent to which delegated legislation can modify procedural obligations prescribed under the parent statute and determine whether pre-show cause consultation is merely discretionary or forms an integral part of the statutory framework.

The matter has been listed for further hearing on 8 September 2026, and until then, the interim protection granted by the High Court will prevent the tax authorities from passing a final order against the petitioner while allowing the adjudication process itself to continue. 

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