Assessee Must Be Allowed to Reply to SCN With Post-Decisional Phrase | HC

Case Details: E-Sports Company vs. Union of India - [2025] 177 taxmann.com 851 (Karnataka)

Judiciary and Counsel Details

• M. Nagaprasanna, J.
• Pallava R., Adv. for the Petitioner
• Jeevan J. Neeralgi, Adv. & K. Hema Kumar, AGA for the Respondent

Facts of the Case

The petitioner, whose registration had been cancelled, was issued a show cause notice seeking to explain why such cancellation should not be revoked. The notice specifically referred to the petitioner’s application for revocation and further stated that, as per an adjudication order passed under section 73, there was a huge liability reflected in the electronic liability ledger, and that only upon clearance of all such dues would the application for revocation be considered. The petitioner contended that this formulation amounted to a post-decisional hearing since the notice itself predetermined that revocation would not be considered unless dues were paid, thereby leaving no real scope for reply. It was submitted that, in fact, no dues were payable at all, and that the tenor of the notice precluded an effective opportunity to respond. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the language used by the Assistant Commissioner, namely that ‘After clearance of all dues, your application will be considered’, unequivocally demonstrated that the authority had already made up its mind and was merely extending a post-decisional hearing. The court observed that such a notice, which determines the outcome in advance and then seeks a response, is legally unsustainable as it nullifies the very purpose of affording an opportunity of hearing under section 29 of the CGST Act and the Karnataka GST Act. It was further held that the petitioner’s stand, that no dues were payable, could not have been advanced in any meaningful manner owing to the structure of the notice. Accordingly, the order based on such notice was set aside, and the matter was remitted for fresh adjudication.

List of Cases Referred to

• Shekhar Ghosh v. Union of India (2007) 1 SCC 331 (para 5)