AP HC: GST Proceedings Vitiated Without Mandatory Pre-SCN Under Rule 142(1A)

The Andhra Pradesh High Court has made an important ruling stating that any assessment or adjudication proceedings that start without the issuance of the required pre-show-cause notice (pre-SCN) as specified in Rule 142(1A) of the Goods and Services Tax (GST) Rules, 2017, are considered legally invalid. This decision emphasises the necessity of following proper procedures in GST-related matters.

While permitting the writ petition submitted via Baba Agriculture Export, a Division Bench including Justice R. Raghunandan Rao and Justice T.C.D. Sekhar ruled that the Order-in-Original dated 25.02.2025, issued u/s 73 of the CGST Act, was void ab initio as no prior notice or intimation in Form GST DRC-01A had been served on the taxpayer before issuance of the formal SCN.

Sri Vadlapatla Sai Mallik, the representative of the applicant, claimed that the proceedings commenced against it were fundamentally inappropriate as the mandatory pre-notice consultation required under Rule 142(1A) was not performed.

Under the regulations stipulated by the CGST Act, the proper officer needs to furnish the taxpayer with the necessary details regarding tax, interest, and penalties before issuing a notice under Section 73 or 74.

This information is provided in Part A of Form DRC-01A. The taxpayer is then allowed to either make a voluntary payment or submit a response to address the matter at hand.

It was not accepted that the lack of these pre-SCN communications makes the applicant unable to get a fair chance to solve the issues before adjudication and therefore breaches the norms of natural justice and Section 75(4), which provides for a personal hearing.

The counsel of the department, Sri B.V.S. Chalapati Rao, countering the petition, stated that the applicant did not raise the same objection before and had taken a chance of personal hearing. He claimed that the applicant had another statutory remedy of appeal u/s 107 of the CGST Act, making the writ petition non-maintainable.

The Bench dismissed the arguments presented by the Revenue, reinforcing the established legal principle that failure to comply with Rule 142(1A) constitutes more than just a procedural error; it is viewed as a substantive illegality. As a result, this non-compliance invalidates the entire adjudication process.

The Court based its decision on a consistent line of rulings that deemed the failure to issue a DRC-01A intimation before starting Section 73/74 proceedings as detrimental to the assessment.

While marking the objective of the pre-SCN consultation, the court said that the rule was rolled out to encourage tax compliance and prevent unwanted litigation.

Read Also: AP HC: GST Proceedings Are Invalid Without a Document Identification Number

“In view of the consistent stand taken by this Court that non-issuance of notice under Rule 142(1A) of the CGST Rules, 2017, would vitiate the entire process of assessment, it would be appropriate to follow the consistent stand,” the court mentioned.