The Allahabad High Court has set aside a GST adjudication order passed against an assessee under Section 74 of the Uttar Pradesh Goods and Services Tax (UPGST) Act, holding that the taxpayer should be granted a fair opportunity to file a detailed reply and seek procedural safeguards such as cross-examination before the matter is decided afresh.
The bench of Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi allowed the writ petition observing that although the petitioner had not submitted a reply on merits, it had sought reasonable time on bona fide grounds and there was no material to establish that it had deliberately avoided the proceedings.
The dispute arose from a common show cause notice dated September 24, 2025, issued under Section 74 of the UPGST Act to 49 different noticees, including the petitioner. The notice alleged wrongful availment and utilization of ineligible Input Tax Credit (ITC) for the period from April 2021 to January 2024, spanning multiple financial years.
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Instead of filing a detailed reply on the allegations, the petitioner sought a 30-day adjournment. It contended that its GST registration had remained under suspension during the relevant period, due to which it was not actively monitoring the GST portal and remained unaware of the show cause notice. According to the petitioner, it came to know of the proceedings only through another dealer, after which it immediately engaged legal counsel. The petitioner further submitted that the allegations covered several financial years and required reconciliation of voluminous purchase records and invoices before an effective response could be filed.
The adjudicating authority declined the request for additional time and proceeded to pass the adjudication order.
The authority held that suspension of GST registration did not exempt a registered person from monitoring the GST portal or complying with statutory obligations. Relying upon the provisions relating to service of notices through the common portal, it observed that service of the notice was legally valid and that the plea of ignorance could not be accepted. It also rejected the contention regarding the volume of records, observing that statutory timelines were sufficient and that no exceptional circumstances existed to justify further adjournment. According to the authority, the request appeared to be an attempt to prolong the adjudication proceedings.
The High Court noted that the petitioner had not yet submitted any reply on merits and had only sought an adjournment to prepare its defence.
The Bench observed that while the adjudicating authority may have been influenced by limitation concerns, certain significant facts could not be ignored. The Revenue had not asserted that the petitioner repeatedly sought adjournments or deliberately delayed the proceedings. Nor had it established that the show cause notice had been effectively served upon the petitioner at an earlier point in time or that the petitioner intentionally avoided participating in the adjudication. In these circumstances, the Court held that the sustainability of the adjudication order became doubtful.
Recognising the principles of natural justice, the Court considered it appropriate to restore the proceedings and permit the petitioner to place its defence before the adjudicating authority rather than allowing the order to stand merely because the reply had not been filed within time.
Allowing the writ petition, the High Court set aside the adjudication order only insofar as it related to the petitioner, while laying down a structured schedule for fresh adjudication.
The Court directed the petitioner to file its final reply to the show cause notice within two weeks. It further clarified that if the petitioner intended to seek cross-examination of witnesses, supply of relied-upon documents, or any other procedural relief, such requests must accompany the reply itself. The adjudicating authority was directed to decide such applications before fixing the matter for final hearing.
The Bench also directed that the petitioner must be given at least fifteen days’ advance notice of the personal hearing. Thereafter, the adjudicating authority shall pass a reasoned order within one month, ensuring that the proceedings are concluded on or before September 30, 2026.
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