The circular issues guidelines for drafting and issuing show cause notices, including pre-SCN intimation in FORM GST DRC-01A wherever feasible. SCNs should specify the relevant facts, contravened provisions, supporting evidence, year-wise quantification of demand, and a concluding paragraph. The importance of providing specific factual particulars is also highlighted with reference to the Telangana High Court judgment in M/s Nice Enterprises v. Deputy Commissioner ST [(2024) 21 Centax 554 (Telangana)]. Further, G.R. Infra Project Ltd. v. State of Madhya Pradesh [(2026) 45 Centax 331 (S.C.), dated 19.08.2026] is referred to for the requirement that the notice itself must contain the necessary allegations and particulars.

Further reliance was placed upon G.R. Infra Project Ltd  to prescribe that demand under section 74 or section 74A(5)(ii) is to be invoked only where there is specific evidence of fraud, wilful misstatement or suppression of facts with intent to evade tax, and not merely for non-payment or a discrepancy noticed during scrutiny.

Parallel proceedings by Central and State authorities on the same subject matter are not to be initiated, in line with the Supreme Court judgment in M/s Armour Security (India) Ltd. v. Commissioner, CGST.

For adjudication, a maximum of four personal hearing opportunities may be granted and virtual hearings may be provided, in keeping with the principles of natural justice recognised in Maneka Gandhi v. Union of India (SC). The adjudication order should be a reasoned speaking order, addressing the taxpayer’s submissions and evidence, and should not exceed the amount or grounds specified in the SCN. The circular refers to Joint Commissioner of Income Tax, Surat v. Saheli Leasing & Industries Ltd. (SC) for guidance on drafting reasoned orders. Information obtained through AI tools must be independently verified.

Rectification under section 161 is limited to errors apparent on the face of the record and must be undertaken only by the authority that issued the order. The Supreme Court judgment in Arun Dev Upadhyaya v. Integrated Sales Service Ltd. [(2023) 8 SCC 11] is referred to in explaining the limited scope of such rectification.

For first appeals, appeals should not be rejected on merits at the admission stage, limitation is to be decided as a preliminary issue, withdrawal applications are to be decided within seven days, and appeals are to be decided within one year as far as possible, with cross-appeals disposed of by a common order.