Wrong Taxpayer’s Show Cause Notice Invalidates GST Demand: GSTAT Lucknow

Sakhsham Knowledge Services Private Limited Vs Nitin Bansal (GSTAT Lucknow)

GSTAT Lucknow Sets Aside Demand Where DRC-01 Had No Valid Notice; DRC-01 Summary Cannot Substitute Section 73 Notice; GSTAT Lucknow Allows Appeal After Notice Addressed to Another Taxpayer; GST Demand Set Aside for Absent Show Cause Notice by GSTAT Lucknow.

Summary: The GSTAT, Lucknow Bench allowed Sakhsham Knowledge Services Private Limited’s appeal and set aside the proceedings arising from a demand for financial year 2018–19. The decisive defect was that the show cause notice attached to the appellant’s Form GST DRC-01 was addressed to a different taxpayer, M/s Sai Kripa Medical Store. The Tribunal held that the appellant had received no show cause notice addressed to it under section 73(1) of the UPGST Act. DRC-01 was only a summary and, in this case, contained figures without allegations or a factual and evidentiary basis. The subsequent proceedings were therefore invalid *ab initio*.

The dispute began with a scrutiny notice concerning a difference in taxable supplies and IGST reported in the appellant’s returns. The appellant replied that an omitted GSTR-1 transaction had been accounted for when it filed GSTR-3B and that the correct tax liability had been discharged. The adjudicating authority later issued an order demanding tax of Rs. 67,180, interest of Rs. 60,463 and penalty of Rs. 30,000. The first appellate authority upheld that order. The appellant challenged both the absence of a valid show cause notice and the demands relating to IGST and input tax credit.