Delhi High Court Grants Interim Relief To Aadhar India Over Non-Issuance Of Pre-Show Cause Notice Intimation In GST Case
The Delhi High Court, while examining whether pre-consultation prior to a GST Show Cause Notice was mandatory or discretionary, granted interim relief to Aadhar India by permitting the proceedings arising from the Show Cause Notice dated 29 November 2024 to continue, but directing that any final order passed pursuant thereto should not be given effect without further orders of...
The Delhi High Court, while examining whether pre-consultation prior to a GST Show Cause Notice was mandatory or discretionary, granted interim relief to Aadhar India by permitting the proceedings arising from the Show Cause Notice dated 29 November 2024 to continue, but directing that any final order passed pursuant thereto should not be given effect without further orders of the Court.
The Division Bench, comprising Justice Prathiba M. Singh and Justice Shail Jain, heard a writ petition on the constitutional validity of Notification No. 79/2020- Central Tax dated October 15, 2020 (Notification) issued by the Central Board of Indirect Taxes and Customs. The Notification amended Rule 142(1A) of the CGST Rules, 2017 by making pre-consultation to the Show Cause Notice under Section 74(5) of the CGST Act, discretionary and unlike the previous regime in which it was held to be mandatory.
A demand cum Show Cause Notice was issued to the Petitioner, Aadhar India for the period 2018-19 to 2019-2020 without first issuing a prior intimation in Form GST DRC-01A by which the proper officer would have to communicate the details of tax, interest and penalty, as ascertained by, in Part A of the Form.
Rule 142 (1A) was inserted into the Rules on October 9, 2019, via Notification No. 49/2019-CT which stipulated for a pre-show cause notice intimation in Form GST DRC-01A. The Rule was introduced with the wording "the proper officer shall, before service of notice... communicate the details... in Part A of FORM GST DRC-01A", making this pre-SCN intimation a mandatory procedural requirement. However, with effect from October 15, 2020 vide Notification No. 79/2020-CT the word "shall" was substituted with "may", making the issuance of Form GST DRC-01A discretionary for the tax officer.
The Petitioner challenged vires of Notification on the premise that by the aforesaid amendment, the pre-show cause notice intimation had become discretionary under Rule 142 (1A) in as much as a taxpayer is precluded from availing an opportunity under Section 74(5). It was submitted that 'language and intent' of Section 74 (5) had indicated that an opportunity ought to have been given to the taxpayer to conclude the assessment or proceedings before the issuance of a Show Cause Notice.
Further, it was also highlighted that this opportunity to close proceedings could be availed only if it was conveyed to the taxpayer what the tax liability was for a particular financial year. Therefore, it was contended that Rule-making issuance of pre-show cause notice intimation is optional ultra vires Section 74(5) of the CGST Act, 2017, therefore rendering it otiose. To corroborate this submission, the Petitioner relied on Andhra Pradesh High Court judgment in case of New Morning Star Travels and Telangana High Court judgment in case of KH Facility Solutions India Private Limited.
The Petitioner put forth the principle that Rules, a delegated legislation cannot go contrary to parent statutory provision. It was submitted that rules are made to aid the provisions and to provide procedure for implementation of the provisions.
After hearing preliminary submissions, the High Court noted that pleadings were complete in the lead matter 'SSAPP Overseas' whereby notice was issued together with a no coercive action order against proceedings under Section 74. Accordingly, the High Court has listed the matter in January, 2026 and clarified that proceedings shall continue by serving a personal hearing notice on the taxpayer.
Case Name: Aadhar India vs. The Additional Director, Directorate General of GST Intelligence
Citation: 2025 LiveLaw (Del) 1541
Case No.: W.P.(C) 16727/2025
Date of Decision: 12.11.2025
Appearance: Advocates Chinmaya Seth (from Confluence Legal), A.K. Set, Palak Mathur appeared on behalf of Aadhar India, whereas was represented by SSCs Anurag Ojha, Anushree Narain and SPC for UOI Rahul Sambher and Advocates P P S Singh, Rajneesh Sharma, Naman Choula, Shivangi Sharma, Ashutosh Bharti, Meenakshi Singh.