The court underscores the necessity for specific details in GST notices to uphold principles of natural justice.
In a significant ruling, the Punjab & Haryana High Court has quashed a show cause notice issued to Abbott Healthcare Private Limited, citing the notice's lack of specific details as a violation of natural justice principles. The judgment, delivered by Justices Deepak Sibal and Lapita Banerji, stressed the importance of including precise details in GST-related notices as mandated under Section 73(1) of the Punjab Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017.
The case arose from a show cause notice dated January 31, 2024, issued to Abbott Healthcare under the aforementioned GST Acts, following a special audit conducted by the Comptroller and Auditor General (CAG) of India. However, the notice was criticized for being based on incorrect premises, as no audit of Abbott Healthcare was actually conducted by the CAG; rather, the audit pertained to the GST Department in Punjab.
The High Court found the notice vague, lacking specific details of alleged discrepancies in the company's GST returns. Allegations included excess Input Tax Credit (ITC) availed and mismatches in ITC as per tables 8A and 8D of GSTR-9, yet the notice failed to provide the basis for these conclusions. The notice also mentioned an undischarged tax liability and short payment under the Reverse Charge Mechanism, but did not specify the context or evidence supporting these claims.
Justice Sibal emphasized the purpose of a notice is to inform the assessee of the department's intent, enabling them to respond effectively. A vague notice does not fulfill this objective and constitutes an empty formality, violating the principles of natural justice. Section 73(3) of the CGST Act requires notices to contain details of tax not paid, short paid, or wrongly availed ITC, ensuring the assessee is adequately informed.
Ultimately, the court set aside the impugned notice, granting the authorities liberty to proceed against Abbott Healthcare in accordance with law, provided proper procedures and specific details are adhered to.
Bottom Line:
Goods and Services Tax (GST) - Show cause notice under Section 73(1) of the PGST Act, 2017 and CGST Act, 2017 must not be vague and should include specific details of alleged discrepancies, as well as the basis for arriving at the conclusions. Non-specific or vague notices violate principles of natural justice and cannot be sustained.
Statutory provision(s): Punjab Goods and Services Tax Act, 2017 Section 73(1), Central Goods and Services Tax Act, 2017 Section 73(1), Principles of Natural Justice, Goods and Services Tax (GST) Section 73(3) of CGST Act.
