Facts of the Case:

The petitioner challenged a show cause notice issued under Section 73(1) of the CGST/PGST/IGST Acts on the grounds that it was factually incorrect and vague. The notice alleged multiple discrepancies such as excess availment of ITC, mismatch in returns, short payment under reverse charge, and undischarged tax liability, primarily based on a purported audit conducted by the CAG. However, it was admitted by the Revenue that no such audit of the petitioner was conducted by the CAG, and the notice was instead based on an internal departmental audit. Further, the audit report forming the basis of the notice was never supplied to the petitioner. The notice also failed to provide specific details or computation basis for the alleged discrepancies.

Issue:

Whether a show cause notice issued under Section 73(1) of the CGST Act is valid when it is based on incorrect facts, unsupported by disclosed material, and lacks specific details required to enable the assessee to respond effectively.

Held That:

The Court held that the impugned show cause notice was legally unsustainable as it was founded on a factually incorrect premise, namely an alleged CAG audit which admittedly did not exist. Further, the notice was vague and devoid of necessary particulars such as the basis for alleged ITC mismatch, excess availment, and tax liability, and the underlying audit report was not furnished to the petitioner.

The Court observed that a show cause notice must clearly specify the allegations and disclose the material relied upon so as to enable the assessee to effectively respond, failing which it violates the principles of natural justice and the mandate of Section 73(3) of the CGST Act. Accordingly, the notice was set aside with liberty to the authorities to initiate fresh proceedings in accordance with law.

Case Name: Abbott Healthcare Private Limited Versus Excise And Taxation Commissioner, Punjab And Ors. dated 02.04.2026

To read the complete judgement 2026 Taxo.online 828