GST Order Need Not Elaborately Deal With Every Submission In Taxpayer's Reply: Delhi High Court

The Delhi High Court has held that merely because a GST adjudicating authority does not elaborately deal with every submission made by an assessee in reply to a show cause notice (SCN), the same cannot lead to a conclusion that the representation was not considered.

A division bench of Justices Anil Kshetrapal and Shail Jain observed that while Section 74(9) of the Central Goods and Services Tax Act, 2017 obligates the proper officer to consider the noticee's representation before determining tax, interest and penalty, the adequacy of reasons recorded by the adjudicating authority and the correctness of its findings are matters that ordinarily fall within the domain of the appellate authority.

"Merely because the Adjudicating Authority has not elaborately dealt with every submission contained in the reply would not, by itself, lead to the conclusion that the representation was not considered at all. Whether the reasoning furnished in the Impugned Order is adequate or whether the conclusions recorded therein are sustainable are matters touching upon the merits of the adjudication and are more appropriately examined in appeal," the Court observed.

The Court was dealing with a writ petition challenging an order passed under Section 74 of the CGST Act confirming a tax demand of over ₹5.51 crore along with interest and penalties.

Petitioner contended that the adjudicating authority had violated Section 74(9) by failing to consider the detailed reply filed to the show cause notice and had merely observed that the reply was not in consonance with the allegations without addressing the specific submissions raised.

Rejecting the contention, the Court held that Section 74(9) indeed casts a duty on the adjudicating authority to apply its mind to the defence raised by the noticee. However, the mere absence of an elaborate discussion on every argument does not establish non-consideration of the representation.

Further, the court found that the other grounds raised by the Petitioner to bypass the statutory appeal mechanism under Section 107 of the CGST Act warranted adjudication on disputed questions of fact, which could not be done in writ jurisdiction.

One of the issues raised by the Petitioner was that the Adjudicating Authority lacked the jurisdiction to impose penalties under Sections 122(1)(ii) and 122(3)(e) of the CGST Act while exercising powers under Section 74 of the Act.

The Court however said that the issue was settled in Patanjali Ayurved Limited v. Union of India & Others (2025) where the Allahabad High Court held that the proper officer who adjudicates proceedings under Sections 73 or 74 of the Act is competent to determine and impose the consequential penalties contemplated under Section 122 of the CGST Act.

“The said view also finds support from Explanation 1(ii) to Section 74 and Rule 142 of the CGST Rules, which envisage culmination of all consequential proceedings arising from the show cause notice by the adjudicating authority itself,” it said.

Petitioner had also questioned the competence of the officer issuing the Impugned SCN or the authority passing the Impugned Order.

The Court however said that the issue raises questions regarding the interpretation of the statutory framework governing assignment of functions under the CGST Act. “Such questions can appropriately be urged before the appellate authority constituted under Section 107 of the CGST Act, which is competent to examine both questions of fact and law arising from the adjudication.”

As such, granting liberty to the petitioner to avail the statutory remedy of appeal under Section 107 of the CGST Act, the Court dismissed the writ petition.

For Petitioner: Advocates A. K. Babbar, B. K. Tripathi