CGST SCN Based on Income-Tax Search Valid if Independently Scrutinised | HC

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CGST SCN income-tax search

Case Details: J M Jain vs. Union of India [2025] 180 taxmann.com 864 (Delhi)

Judiciary and Counsel Details

  • Prathiba M. Singh & Shail Jain, JJ.
  • J.K. Mittal, Ms Vandana Mittal, Mukesh Choudhary, Mohit & Lalitendra, Advs. for the Petitioner.
  • Brijesh Yadav, Avinash Shukla, Priyatam Bhardwaj, Shagan Vaswani, Advs., Dipak Raj & Anurag Ojha, SSC for the Respondent.

Facts of the Case

The petitioner submitted that the Income-tax Department conducted a search at its premises for the relevant period and recovered computer servers, audit books, statutory records, digital devices, and employee communications, followed by recording of statements. It was stated that these materials were later shared with the GST authorities, who thereafter issued a show cause notice (SCN) alleging concealed commission income and GST evasion for FY 2019-20 to 2021-22. It was contended that the SCN was vague and baseless, relied solely on income-tax material without independent GST inquiry. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that documents and statements obtained during an income-tax search may be utilised by the GST authorities for scrutiny, but any presumption arising therefrom under Section 292C of the Income-tax Act, 1961 is rebuttable and cannot, by itself, form the basis of a final assessment under Section 74 of the CGST Act. The Court observed that the SCN in question was accompanied by relied-upon documents, business analysis, special audit findings, statement summaries, and GST computation, and therefore could not be considered vague or lacking particulars. The Court concluded that the challenge was premature, as the petitioner must first reply to the SCN and participate in adjudication, where all objections may be raised.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied