Dinesh Kumar Goyal Vs Deputy Commissioner of State Tax (Calcutta High Court)
Coercive Action Stayed Against GST Demand Raising Jurisdictional Issues Under Section 74 – Calcutta HC
The petitioner challenged the legality, validity, and sustainability of the Form GST DRC-01A dated 22.07.2025, the show cause notice dated 04.09.2025, and the consequential adjudication order dated 25.03.2026, which raised a GST demand of ₹3,91,402 for Financial Year 2019-20.
The Court identified the principal issues for consideration as: (i) whether an officer subordinate to the authority that issued DRC-01A could issue a show cause notice and pass an adjudication order under Section 74 of the CGST Act, 2017; (ii) whether mentioning Section 74 in the show cause notice while referring to Section 73(1) in its body rendered the proceedings invalid; and (iii) whether fresh proceedings could be initiated when proceedings commenced through DRC-01A remained pending without consideration, in light of SSB Petro Products v. Asst. Commissioner.
The petitioner, a sole proprietor carrying on business as M/s. Bengal Steel Sales and Industries, is registered under the Central and State GST laws and stated that returns had been regularly filed and admitted tax paid.
According to the petitioner, Respondent No. 1 issued Form GST DRC-01A on 22.07.2025, alleging wrongful availment of input tax credit based on transactions with a supplier alleged to be non-existent or fictitious, and directed reversal by 29.07.2025, failing which a show cause notice would follow. The petitioner submitted a reply on 28.07.2025, seeking documents and a personal hearing. Instead of considering the reply, Respondent No. 2 issued the show cause notice on 04.09.2025 and subsequently passed the final order dated 25.03.2026. Since the final order was passed during the pendency of the writ petition, it was brought on record through a supplementary affidavit.
