BackgroundThe Revenue sought clarification/modification of clause (xiii) of paragraph 103 of the High Court’s judgment dated 01.10.2026. That clause stated that a deposit made by a purchasing dealer during investigation, including through Form GST DRC-03, would not by itself dispense with a show cause notice disclosing the foundational facts, and that the character and effect of the deposit would be determined by the Proper Officer on the facts of each case. The Revenue contended that this observation should not be applied to cases where tax, penalty and interest had been voluntarily deposited and no proceedings were initiated to question the liability, since Section 74(6) provides that no notice is required in such circumstances.The Court clarified that clause (xiii) must be read with clause (xii), which requires a reasoned order addressing the noticee’s reply and disputed conditions of Section 16(2), and, where Section 74 is invoked, a specific finding regarding fraud, wilful misstatement or suppression. The observation about the need for a notice concerned cases where the foundational facts had not been disclosed. The Proper Officer must determine, on the facts of each case, whether the deposit was voluntary or involuntary and its effect. The Court expressly held that clause (xiii) does not narrow the scope of Section 74(6), and that voluntary deposits of tax, penalty and interest attract that provision, so no notice is required in such cases. The clarification also does not permit reopening closed transactions where voluntary deposits had not been questioned by the assessee.Final VerdictThe modification application was disposed of with the above clarification. The Court preserved the requirement for a show cause notice where foundational facts have not been disclosed, while confirming that Section 74(6) continues to apply to voluntary deposits of tax, penalty and interest. The character and effect of a deposit remain matters for the Proper Officer to determine on the facts of the individual case.Key observation: “voluntary deposits made of tax, penalty and interest, would attract the applicability of Section 74(6) of the Act, in which case there would be no requirement of issuance of a notice.”

BackgroundTwo writ petitions by the same proprietorship arose from Section 74 proceedings alleging inadmissible ITC availed on invoices of allegedly non-existent suppliers (Rs.23,06,264/- in the first matter and Rs.2,68,320/- in the second). The substantive SCNs were dated 11.07.2024 and 09.07.2024, but the DRC-01 summaries were dated 23.08.2024 and 28.08.2024; the Orders-in-Original were dated 27.01.2025 and 29.01.2025, with DRC-07 in the second matter dated 21.02.2025. The petitioner contended that the DRC-01/DRC-07 dates govern limitation, making the SCNs barred under Section 74(2) (cut-off asserted as 04.08.2024) and the order barred under Section 74(10) (cut-off asserted as 04.02.2025). It also argued that no fraud, wilful misstatement, suppression, knowledge or collusion was shown, so Section 74 could not be invoked.Final VerdictThe Court held that Section 74(2) and 74(10) attach to the issuance of the substantive notice under Section 74(1) and the order under Section 74(9), while Rule 142 treats DRC-01 and DRC-07 only as electronic summaries that follow them. Following Rishi Enterprises and Suresh Kumar (Delhi HC), the dates on Forms DRC-01 and DRC-07 cannot by themselves render the substantive SCN or adjudication order time-barred; here both SCNs and both orders preceded the cut-off dates asserted by the petitioner, so no patent jurisdictional defect was shown. The pleas on fraud, suppression, knowledge, collusion and admissibility of ITC were held to be matters of fact for the Appellate Authority, and since the petitioner had participated in adjudication and no breach of natural justice was shown, the Court declined to convert writ jurisdiction into appellate jurisdiction (Commercial Steel). The petitions were disposed of with liberty to appeal under Section 107, all merits contentions left open, and any request to exclude the time spent in the writ to be considered by the Appellate Authority in accordance with law.  

BACKGROUNDThe assessee filed a return of income for the assessment year 1968-69 but failed to pay self-assessment tax within the prescribed time under Section 140A(1) of the Income Tax Act. The Income Tax Officer imposed penalty under Section 140A(3) for non-payment of self-assessment tax. The Appellate Assistant Commissioner reduced the penalty on appeal. In second appeal, the Bombay Income Tax Tribunal took note of the Madras High Court decision in A.M. Sali Maricar which had struck down Section 140A(3) as unconstitutional being violative of Article 19(1)(f) of the Constitution, and cancelled the penalty order on that basis. The Revenue challenged this before the Bombay High Court by way of a reference question. CRUCIAL COURT OBSERVATIONS (Verbatim)"It is the settled position in law, in view of the decision of the Supreme Court in K.S. Venkataraman and Co. (P.) Ltd. v. State of Madras, that an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions.""It should not be overlooked that the Income-tax Act is an All-India statute and if an Income-tax Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that section 140A(3) was non-existent, the order of penalty thereunder cannot be imposed by the authority under the Act. Until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land.""What the Tribunal really did was that in view of the law pronounced by the Madras High Court it proceeded on the footing that section 140A(3) was non-existent and so the order of penalty passed thereunder cannot be sustained.""When the Tribunal set aside the order of penalty it did not go into the question of intra vires or ultra vires. It did not go into the question of constitutionality of section 140A(3). That section was already declared ultra vires by a competent High Court in the country and an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question." FINAL VERDICT The Bombay High Court answered the reference question in the negative and in favour of the assessee, holding that the Tribunal was correct in setting aside the penalty order and was not required to independently go into the constitutionality of Section 140A(3), since it was duty-bound to follow the Madras High Court's declaration that the section was non-existent, there being no contrary High Court decision at the relevant time. Costs awarded to the assessee. 👍

BackgroundOn the basis of data received from DGA (Central), Lucknow, an SCN dated 12.07.2024 under Section 74 proposed GST of Rs.5,10,00,146/- (CGST and SGST Rs.2,55,00,073/- each) for July 2017–March 2018 for alleged false declaration of taxable value. After reply dated 07.08.2024 and a hearing, the order dated 13.11.2024 confirmed tax of Rs.2,91,39,160/- with interest and an equal penalty under Section 74(1) read with Section 122(2)(b), dropping Rs.2,18,60,986/-. The petitioner challenged Circulars No. 3/3/2017-GST, 31/05/2018-GST and 169/01/2022-GST as beyond the Board’s power (relying on Canon India), and also the SCN/order for want of digital signature, personal hearing, ASMT-10, the Section 74 pre-conditions and limitation.Final VerdictNoting that the Bombay HC decision in Fomento Resorts & Hotels is under appeal but no Supreme Court direction restrains High Courts, the Court agreed with that view that Canon India is distinguishable, since the officers concerned are admittedly central tax officers appointed under Section 3 read with Section 5 via the notification dated 19.06.2017, and held that the pleas questioning the three circulars have no basis to stand. Finding that the order was passed after considering the reply and granting a personal hearing, and that none of the Chhabil Dass Agarwal exceptions applied, the Court declined to act as a fact-finding body and relegated the petitioner to the statutory appeal. Liberty was granted to appeal within 30 days; since the writ was filed on 07.03.2025, within 30 days after expiry of the three-month appeal period, the Appellate Authority would not oust the petitioner on limitation. The writ was disposed of accordingly.  

BackgroundThe proceedings arose from a GST investigation concerning allegations of issuance of invoices without actual supply of goods, wrongful availment or passing on of Input Tax Credit and allied contraventions under the CGST Act. The investigation involved search proceedings and reliance by the Department on statements, electronic material and handwritten records. The Petitioners disputed the allegations and contended that the material relied upon did not independently establish their involvement in the alleged transactions.SCNs were issued under Section 122 proposing penalties under various provisions of Section 122. The Petitioners challenged the consequential adjudication orders on several grounds, including lack of jurisdiction of the officer issuing the SCNs, non-supply of relied-upon documents, denial of effective personal hearing and cross-examination, reliance on untested statements/electronic material, multiplication of penalties under different clauses of Section 122(1), and alleged inconsistencies in findings arising from the same investigation.Court ObservationThe Court held that Section 122(1) predicates liability upon a person being a “taxable person”, whereas Section 122(1A) is differently worded and operates upon “any person” in the specified circumstances. However, whether a particular person satisfies the statutory description and the precise role attributed to that person are intertwined with the factual material. The Court therefore left the question of applicability of Section 122(1) to a person who is not a taxable person open, as the issue is pending before the Supreme Court.Regarding the competence of the officer issuing the SCN, the Court observed that the expression “proper officer” under Section 2(91) is function-specific and that merely being an officer of central tax does not automatically make an officer the proper officer for every statutory function. At the same time, the Court noted that Notification Nos. 02/2017 and 14/2017 had to be considered along with Sections 3 and 5 of the CGST Act.The Court was unable to hold that absence of a specific assignment under Section 2(91), by itself, rendered the concerned central tax officer legally without authority. Notification No.14/2017 invested DGGI officers with powers corresponding to officers of the relevant rank, while Notification No.02/2017 assigned specified functions. Therefore, the question of competence could not be determined merely by relying upon the subsequent Circular dated 27.10.2025.The Court further observed that the objection regarding officer competence was not a patent or self-evident absence of jurisdiction warranting interference under Article 226. It involved interpretation of the statutory scheme, notifications, the subsequent Circular and the relationship between proceedings under Sections 73/74 and consequential penalties under Section 122. These issues could be examined by the statutory Appellate Authority under Section 107.The Court also found that the remaining challenges—relating to replies, relied-upon documents, personal hearing, cross-examination, evidentiary material, multiplication of penalties, clubbing of financial years and alleged inconsistent findings—required detailed examination of the underlying record and factual position of the respective noticees.Importantly, the Court held that the amended pre-deposit requirement under Section 107(6), effective from 01.10.2025, would not apply to appeals arising from SCNs issued before that date. Such appeals would be governed by Section 107(6) as it stood on the date on which the respective adjudicatory proceedings commenced.Final VerdictThe High Court disposed of the writ petitions on the ground that an efficacious statutory remedy was available under Section 107 of the CGST Act. The Court declined to exercise its extraordinary jurisdiction under Article 226 and permitted the Petitioners to pursue statutory appeals. The Appellate Authority was directed to examine all grounds, including the issues left open by the judgment, independently and uninfluenced by the observations made by the High Court.The Court specifically directed that appeals arising from SCNs issued before 01.10.2025 would be governed by the Section 107(6) pre-deposit provision applicable on the respective dates of issuance of the SCNs and could not be rejected merely because the Orders-in-Original were passed after 01.10.2025. The Petitioners were also permitted to seek exclusion of the period during which the writ petitions remained pending for limitation purposes.Cases Referred by CourtGaurav Jain & Anr. v. Joint Commissioner (Appeals-II), CGST Delhi Zone & Anr. — 2026:DHC:6124-DB.Considered on the applicability of the amended Section 107(6) pre-deposit requirement.Mukesh Kumar Garg v. Union of India & Ors. — SLP(C) No.18178/2025.The issue concerning applicability of Section 122(1) to a person who is not a “taxable person” was pending before the Supreme Court.Arun Kumar Jain v. Additional Commissioner, CGST, Delhi West & Ors. — 2026:DHC:6609-DB.Considered regarding applicability of Section 122(1) to a person who is not a taxable person.Devender Singh v. Additional Commissioner, CGST, Delhi West — 2025:DHC:9881-DB.Considered on the competence of the Additional Commissioner/officer to issue SCNs under Section 122.Sunil Chauhan, Proprietor of Shree Chem India v. Principal Commissioner of CGST, Delhi North & Ors. — 2026:DHC:5477-DB.Considered regarding the relationship between proceedings under Sections 73/74 and consequential penalties under Section 122.Alokadei Holdings Pvt. Ltd. v. Commissioner of Central Tax — W.P. No.4426/2026.Considered on the competence of the officer and the relationship between the statutory adjudication and Section 122 penalty proceedings.Patanjali Ayurved Ltd. v. Union of India & Ors. — [2025] 99 GSTL 7 (Allahabad).Considered on whether consequential Section 122 penalty forms part of the adjudicatory exercise under Sections 73/74; the Court noted that the decision was under challenge before the Supreme Court.Assistant Commissioner of State Tax & Ors. v. Commercial Steel Limited — (2022) 16 SCC 447.Referred to on the principles governing exercise of writ jurisdiction where an alternative statutory remedy exists.Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh & Ors. — 1953 SCC OnLine SC 33.Referred to in the context of the contention concerning the substantive/vested nature of the right of appeal and the applicable pre-deposit requirement.Amit Manilal Haria & Ors. v. Joint Commissioner, CGST & Central Excise & Ors. — W.P. No.5001/2025 (Bombay High Court).Referred to concerning the contention against retrospective application of Section 122(1A).Paramvir Singh Saini v. Baljit Singh & Ors. — SLP(Crl.) No.3543/2020.Referred to in relation to the safeguards concerning statements recorded under Section 70 of the CGST Act.