A Show Cause Notice (SCN) issued by the tax department has been set aside by the Delhi High Court, keeping that its issuance before the taxpayer had a reasonable chance to respond to a prior notice was a breach of the norms of natural justice.
Varian Medical Systems International India Pvt. Ltd., the petitioner, filed an appeal contesting a Show Cause Notice (SCN) issued on November 27, 2024, and the final audit report dated February 13, 2025. These proceedings arose from an audit covering the financial years 2017-18 to 2022-23.
The applicant’s counsel, the audit report was issued after the specified duration u/s 65 of the CGST Act. It said that the Show cause notice was issued dated 27th November 2024, even though the pre-SCN on 25th November 2024 had granted the applicant time until 28th November 2024 to file its reply.
The department’s senior standing counsel stated that the audit was concluded in 3 months specified under section 65, and the final report was communicated in the subsequent 30-day window authorised under law.
A division bench comprising Justice Prathiba M. Singh and Justice Shail Jain analysed the timeline and found that the audit report was communicated within the allowable time, thereby rejecting the applicant’s claim. But the court discovered merit in the second claim.
It was said that the pre-SCN permits the applicant to file the submissions until 28th November 2024. The department’s issuance of the final SCN dated 27th November 2024, a day before the due date, was held to constitute a “complete violation of the principles of natural justice.”
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The impugned SCN was set aside by the court. The proceedings were relegated to the pre-SCN phase, with the court allowing the applicant to submit a response to pre-SCN. Then the department was asked to decide afresh whether a new SCN must be issued, as per the law.
| Case Title | Varian Medical Systems International India Pvt. Ltd. vs. Union of India & ORS |
| Case No. | W.P.(C) 1064/2025 & W.P.(C) 13605/2025 |
| For Petitioner | Mr. Gajendra Maheshwari |
| For Represented | Ms Gauri Goburdhun, Mr R. Ramachandran, Mr Prateek Dhir |
| Delhi High Court | Read Order |
