Yamada Automation Pvt. Ltd. Vs Union of India and Others (Punjab & Haryana High Court)
Punjab & Haryana High Court: Mere rejection of reply as “not satisfactory” without recording reasons renders adjudication order unsustainable
Summary: The Punjab and Haryana High Court set aside a GST adjudication order passed against Yamada Automation Pvt. Ltd. under Section 73 of the Punjab Goods and Services Tax Act, 2017, holding that an adjudicating authority cannot reject a taxpayer’s response to a show cause notice merely by stating that the explanation was not satisfactory. The petitioner challenged the order because adequate reasons had not been given for rejecting its reply. It was argued that reasons constitute the soul of a quasi-judicial order and that their absence rendered the adjudication legally unsustainable.
The petitioner, described in the accompanying case summary as a manufacturer of auto parts, had faced proceedings concerning an alleged mismatch between GSTR-3B and GSTR-2B returns. A show cause notice was issued and the petitioner submitted its response. The adjudicating authority nevertheless confirmed the GST liability without adequately explaining why the reply was unacceptable. The petitioner consequently approached the High Court seeking fresh consideration of its response and a reasoned decision.
Before the High Court, counsel for both parties agreed that the controversy was covered by an earlier decision of the same Court in CWP No. 6678 of 2026, decided on 8 July 2026. In that case, the High Court had held that merely recording dissatisfaction with a written explanation did not amount to valid adjudication. An authority exercising quasi-judicial powers must engage with the specific issues raised by the taxpayer. The earlier judgment had also followed a coordinate Bench decision in CWP No. 16293 of 2024, dated 25 May 2026, in which an adjudication order had similarly been set aside and the matter remanded.
Applying the earlier ruling, the Division Bench comprising Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor allowed the writ petition, set aside the impugned adjudication order and remitted the matter to the competent authority for fresh consideration in accordance with law. The Court did not determine the correctness of the underlying GST demand or the alleged return mismatch on merits. The case reinforces the requirement that tax adjudication orders must disclose proper reasons and demonstrate meaningful consideration of the taxpayer’s explanation.
Cases Discussed
- Punjab and Haryana High Court, CWP No. 6678 of 2026, order dated 8 July 2026— Followed directly. The Court held that stating a written explanation was unsatisfactory, without considering the taxpayer’s specific submissions, did not constitute valid quasi-judicial adjudication. The matter was remanded for fresh consideration.
- Punjab and Haryana High Court, CWP No. 16293 of 2024, order dated 25 May 2026— Earlier coordinate Bench decision followed in CWP No. 6678 of 2026. The adjudication order was set aside and the proceedings were remitted to the concerned authority for fresh consideration.
Appeared for the Petitioner: Advocate Bharat Raichandani and Advocate Kinshu Mittal.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. This petition is directed against an order passed under Section 73 of the Punjab Goods and Services Tax Act, 2017, holding the petitioner liable to payment of GST after observing that the petitioner’s explanation to the Show Cause Notice (SCN) was not found satisfactory.
2. The order is challenged on the ground that adequate reasons have not been assigned for the non-acceptance of the petitioner’s explanation to the SCN and, therefore, the reasons, which are the soul of the order, are missing. It is, therefore, submitted that in such circumstances, the authority concerned be directed to consider the petitioner’s response to the SCN, on merits, and pass an appropriate reasoned order in accordance with law.
3. Learned counsel for the both the parties are ad idem that in somewhat similar facts and circumstances to the present case, CWP No. 6678 of 2026 has been allowed by this Court vide order dated 08.07.2026, and the matter was remitted to the adjudicating authority for fresh consideration of cause in accordance with law.
4. The relevant portion of the order dated 08.07.2026, passed by this Court, is reproduced hereinafter:-
“2. The matter was adjourned on 06.07.2026 by us in order to enable the learned State counsel to obtain instructions. Learned State counsel has obtained instructions, and it could not be shown that the petitioner’s response to the SCN was accorded any consideration. Merely stating that the written explanation is not satisfactory would not suffice. An adjudicating authority, while exercising a quasi-judicial function, is expected to deal with the specific issues urged before it, and merely stating that the explanation is not satisfactory cannot subserve the purpose of a valid adjudication.
3. In somewhat similar facts and circumstances, a Co- ordinate Bench of this Court, in CWP No.16293 of 2024 decided on 25.05.2026, also set aside the adjudication order and remitted the matter to the concerned authority for fresh consideration.
4. Following the order passed in CWP No.16293 of 2024, as well as for the reasons recorded above, this petition succeeds and is allowed. The impugned orders are set aside, and the matter stands remitted to the adjudicating authority for fresh consideration of cause in accordance with law.”
5. In view of the admitted similarity of facts and circumstances, the controversy arising in the present writ petition stands squarely covered by the decision rendered in CWP-6678-2026. Accordingly, the present writ petition is allowed. The impugned order is set aside, and the matter stands remitted to the adjudicating authority for fresh consideration of cause in accordance with law.
6. Pending application(s), if any, shall stand disposed of accordingly.
