Comfort Battery Vs Additional Commissioner Central Goods And Services Tax (Allahabad High Court)
The Allahabad High Court examined a writ petition challenging an adjudication order dated 15.12.2025 passed under Section 74 of the CGST/UPGST Act for the financial years 2018–19 to 2022–23, along with the show-cause notice dated 24.06.2025 issued in Form GST DRC-01.
The petitioner’s primary contention was that the adjudication order imposed a penalty of Rs. 4,36,18,072/-, whereas the show-cause notice in Form DRC-01 specified the penalty as “0.” It was argued that such confirmation of penalty, not proposed in the statutory notice, violated Section 75(7) of the Act.
The revenue authorities responded that although the penalty column in Form DRC-01 reflected “0,” the detailed show-cause notice annexed to the form clearly proposed imposition of penalty equivalent to the disallowed Input Tax Credit (ITC) under Section 74.
The Court examined the statutory provisions governing the matter, including Section 74(1), which requires issuance of a notice specifying the amount of tax, interest, and penalty proposed to be recovered. It also referred to Sections 74(5) and 74(8), which provide an opportunity to the noticee to settle the proceedings by paying tax, interest, and a reduced penalty within prescribed timelines.
Further, the Court considered Rule 142 of the CGST Rules, which mandates that a summary of the show-cause notice be issued electronically in Form GST DRC-01. The Court emphasized that this form is a statutory format requiring clear disclosure of all proposed demands, including tax, interest, penalty, fee, or other amounts.
