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Allahabad HC in the case of M/s Ratan Industries Limited

Case Covered:

M/s Ratan Industries Limited


The State Of U.P.

Facts of the Case:

The present petition has been filed by the petitioner challenging the order dated 24.1.2019 passed by respondent no. 3, whereby a tax demand of Rs. 91,450/- and interest thereon has been passed as per GST DRC-07 as well as the order dated 27.7.2020 passed by the Appellate Authority under Section 107 of the GST Act, whereby the appeal filed by the petitioner has been dismissed on the grounds of limitation.

The petitioner claims to be carrying on the business of manufacture and sale of the auto parts and is duly registered under the GST Act. The petitioner claims that he is purchasing raw material for the manufacturing of the goods and are eligible for an input tax credit. The petitioner claims to have submitted the details as are required and the amount of tax was paid after deducting the ITC. The petitioner claims that he came to know on 15.12.2019 that some orders have been passed as per DRC07 dated 24.1.2019 by the respondent no. 3 in purported exercise of powers under Rule 142(5) of the GST Rules.


In view of the specific contentions raised by the petitioner with regard to the non-service of show cause notice and nonfurnishing of a reasoned order, this Court had called for a counter-affidavit from the respondents. A counter affidavit has been filed, wherein a show-cause notice has been annexed as Annexure-4, however, in para 9 of the counter affidavit it has been admitted that on account of clerical inadvertence, the show cause notice was sent to the wrong E-mail address. In respect of the demand notice, only a summary of the order dated 24.1.2019 has been filed as Annexure-5 and no order giving the reasoning for levy of demand has even been filed in the counter affidavit.

In view of the stand taken by the respondents in the counter affidavit, it is clear that show cause notice was never served upon the petitioner as well as the reasons for quantification of the demand has also never been served upon the petitioner. In view thereof, it is clear that the statutory provisions as well as the principles of natural justice have been clearly violated. Service of the show cause notice at a wrong E-mail address is neither contemplated under the Act nor can it be deemed to be a proper service under the Act. As no show cause notice has ever been served, the petitioner never had any occasion to file its reply, and thereafter not serving a copy of the reasoned order quantifying the demand is clearly erroneous.

The Decision of the Court:

In view thereof, the writ petition is allowed. The order dated 24.1.2019 as well as the order dated 27.7.2020 passed by the respondent no. 3 and respondent no. 2, respectively, are set aside.

As the show cause notice has now been served upon the petitioner and is contained in Annexure-4 of the counter affidavit, the petitioner shall file his reply to the said show-cause notice within a period of four weeks from today and the respondents shall be at liberty to pass fresh orders, after giving an opportunity of hearing, in accordance with the law.

Copy of the order downloaded from the official website of this Court shall be treated as a certified copy of this order.

Read & Download the full Decision in pdf:

Allahabad HC in the case of M/s Ratan Industries Limited

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