The petitioner challenged a show cause notice issued under Section 74 which was based on an audit conducted under Section 65 of the CGST Act. The factual background showed that although documents were furnished during audit, no discrepancy notice under Rule 101(4) was issued prior to initiation of proceedings.

The Court held that issuance of a show cause notice solely on the basis of an audit report, without following the mandatory statutory procedure, was unsustainable. The audit mechanism cannot substitute adjudication and independent application of mind. The impugned show cause notice was quashed.