The Hon’ble Punjab & Haryana High Court in the case of Abbott Heathcare Private Limited vs Excise and Taxation Commissioner and Ors [CWP 4495 of 2024, order dated April 02, 2026] held that a show cause notice issued under Section 73 of the CGST Act, lacking specific ‘details’ and basis for allegations, is vague, non-specific, and violates principles of natural justice, thereby rendering it liable to be quashed.
Facts:
Abbott Heathcare Private Limited (“the Petitioner”) is an assessee against whom a show cause notice under Section 73 was issued alleging excess availment of input tax credit, mismatch in ITC, and short payment of tax.
The Excise and Taxation Commissioner and Ors (“the Respondent”) issued the impugned show cause notice primarily based on a special audit, alleging excess ITC availment as per GSTR-9 tables, ITC mismatch between returns and financial statements, mismatch with GSTR-2A, excess ITC under ISD mechanism, and undischarged tax liability.
The Petitioner contended that the show cause notice was vague, non-specific, and devoid of any basis or details to substantiate the allegations, thereby preventing the Petitioner from effectively responding. The Respondent contended that the notice was issued pursuant to audit findings and contained allegations sufficient to proceed under Section 73. The Petitioner’s grievance was that the impugned show cause notice failed to disclose the necessary ‘details’ required under law and was issued mechanically.
Issue:
Whether a show cause notice issued under Section 73 of the CGST Act, without providing specific details and basis for allegations, is valid in law?
Held:
The Hon’ble Punjab & Haryana High Court in CWP 4495 of 2024 held as under:
- Observed that, Section 73(3) mandates that ‘details’ of tax not paid, short paid, erroneously refunded, or ITC wrongly availed must be brought to the assessee’s notice through the show cause notice.
- Noted that, the impugned show cause notice merely listed allegations such as excess ITC, mismatch, and short payment of tax without providing any basis or supporting material.
- Observed that, none of the allegations in the notice were backed by any particulars or working, thereby making the notice non-specific and vague.
- Noted that, the show cause notice was based on a special audit of the GST Department in Punjab and not on an audit conducted by the Comptroller and Auditor General of India, rendering the very premise factually incorrect.
- Observed that, absence of ‘details’ defeats the purpose of a show cause notice, which is to inform the assessee of the Department’s intent and enable an effective response.
- Held that, the impugned show cause notice is vague, bereft of details, and amounts to an empty formality, violating principles of natural justice. Accordingly, the show cause notice was quashed.
Our Comments:
The Court has interpreted Section 73(3) of the CGST Act to require that the show cause notice must contain “details” of the alleged tax shortfall or ITC irregularity. The judgment emphasizes that mere reproduction of allegations without supporting basis, computation, or material renders the notice legally unsustainable.
The Hon’ble Supreme Court in M/S Armour Security (India) Ltd. V. Commissioner, CGST, Delhi East Commissionerate & Anr [2025 INSC 982] while determining on different issues, had noted that, “A show cause notice sets the law in motion concerning the liability under the statute, containing charges that a specific person is called upon to answer. In other words, it sets out the alleged violations of legal provisions and requires the assessee to explain why the duty should not be recovered from them. Thus, a show cause notice cannot be vague, nor can any allegations be made without evidence being commensurate with the gravity of the charges levelled against the noticee.”
This judgment is consistent with the present ruling in holding that a non-speaking and vague show cause notice is unsustainable, reinforcing uniform judicial approach.
Relevant Provisions:
Section 73 of the CGST Act, 2017
“73. Determination of tax pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-
(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under subsection (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
(6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
…”
CLICK HERE FOR OFFICIAL JUDGMENT COPY
(Author can be reached at info@a2ztaxcorp.com)
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
