GST Audit | Delhi High Court Sets Aside Show Cause Notice Issued Before Deadline To Reply To Pre-SCN, Says It Violates Natural Justice
The Delhi High Court has quashed the Show Cause Notice (SCN) issued to a company before conducting audit, holding that the authorities violated principles of natural justice by issuing the SCN before expiry of time granted to respond to the pre-SCN.A Division Bench of Justices Prathiba M. Singh and Shail Jain observed,“the Petitioner was given time to file submissions till 28th...
The Delhi High Court has quashed the Show Cause Notice (SCN) issued to a company before conducting audit, holding that the authorities violated principles of natural justice by issuing the SCN before expiry of time granted to respond to the pre-SCN.
A Division Bench of Justices Prathiba M. Singh and Shail Jain observed,
“the Petitioner was given time to file submissions till 28th November, 2024…However, surprisingly, the authority has decided to issue the SCN itself one day before the said day expires i.e. on 27th November, 2024 itself. Thus, this would be completely in violation of the principles of natural justice in terms of the pre-SCN itself. Accordingly, the SCN is set aside.”
The development comes in two connected petitions filed by the company— one challenging the SCN and the other challenging the final audit report.
The High Court noted that the pre-SCN issued on November 25, 2024, had explicitly granted the petitioner time until November 28, 2024 to file its reply. However, the department issued the SCN one day prior, effectively denying the company the opportunity to submit its response.
It thus relegated the proceedings to pre-SCN stage and permitted the petitioner to file a reply to the pre-SCN.
On the issue of limitation, the company had argued that the audit report was issued beyond the timeframe prescribed under Section 65 of the Central Goods and Services Tax Act, 2017.
Rejecting this contention, the Court held that the final audit report dated February 11, 2025, and communicated two days later was within the permissible statutory period. It observed,
“The scheme of the Act is that the registered person is to be informed by way of a notice period of at least 15 days prior to the conduct of the audit. The date from when the commencement of the audit takes place is the date from when the registered person makes available the records and other documents as called for by the authorities. Further, the audit has to be then concluded within three months and within a period of 30 days, the same has to be communicated to the registered person.”
Accordingly, the matter was disposed of.
Appearance: Mr. Gajendra Maheshwari, Adv. for Petitioner; Mr. R. Ramachandran, SSC with Mr. Prateek Dhir, Adv. for R-2 & 3 for Respondents
Case title: Varian Medical Systems International India Pvt. Ltd. v. Union Of India & Ors.
Citation: 2025 LiveLaw (Del) 1512
Case no.: W.P.(C) 1064/2025