No SCN u/s 73 if Explanation Offered in Response to Notice Was Accepted by Department | HC

Case Details: Goverdhandham Estate (P.) Ltd. v. State of Rajasthan - [2025] 170 taxmann.com 727 (Rajasthan)

Judiciary and Counsel Details

• Manindra Mohan Shrivastava, ACTG. CJ. & Mrs Shubha Mehta, J.
• Sandeep Taneja & Kartikey Sharma, Advs. for the Petitioner.
• Punit Singhvi, Ayush Singh, Ajay Shukla & Pushpendra Badgoti, Advs. for the Respondent.

Facts of the Case

The petitioner was engaged in the business of operating hotels and submitted its monthly returns. The department issued a notice stating that the petitioner had availed input tax credit which was not available to him as per Section 17(5) of the CGST Act, 2017. It submitted a reply but the department issued a show cause notice (SCN) under Section 73 of the Act. It filed a writ petition to challenge the SCN.

High Court Held

The Honorable High Court noted that the power under Section 73 could be invoked only when the explanation offered was not satisfactory. In the instant case, a communication in FORM No. GST ASMT-12 was issued to the petitioner, stating that the petitioner’s reply to the notice under Section 61 had been found to be satisfactory. However, despite this communication, the department initiated proceedings under Section 73 through a show cause notice. Therefore, it was held that the SCN was liable to be set aside.