MOHAN & CHANDRASEKHAR
Chartered Accountants
Hosur | Bengaluru | Chennai
GST Case Law Update
April 2026
“NOTICE WITHOUT BASIS IS NO NOTICE AT ALL”
Punjab & Haryana High Court Strikes Down CAG-Based GST Show Cause Notice
Abbott Healthcare Pvt. Ltd. vs. Excise and Taxation Commissioner, Punjab | CWP-4495-2024 (O&M) | Date of Decision: 02.04.2026
The Background
The Punjab & Haryana High Court, in a Division Bench judgment delivered by Hon’ble Mr. Justice Deepak Sibal and Hon’ble Ms. Justice Lapita Banerji, has set aside a Show Cause Notice issued under Section 73(1) of the CGST/PGST/IGST Acts, 2017, holding it to be factually incorrect, vague, and violative of the principles of natural justice.
The SCN dated 31.01.2024 was issued to Abbott Healthcare Private Limited (GSTIN: 03AAACK3935D1Z2) for FY 2018-19, raising demands aggregating to approximately ₹6.13 crores covering excess ITC, ISD mechanism, RCM short payment, and undischarged tax liability — purportedly on the basis of a CAG special audit.
What Went Wrong With the Notice
The Court identified three fundamental and fatal defects in the impugned SCN:
1. Wrong Factual Foundation
The SCN stated it was based on a CAG audit of the petitioner company. The State’s own counsel admitted before the Court that no such audit of Abbott Healthcare was conducted. The audit in question was a CAG audit of the GST Department of Punjab — not of the assessee. The very premise of the notice was, therefore, factually incorrect.
2. Material Not Supplied to the Assessee
The CAG report, which formed the sole basis for issuance of the SCN, was never provided to the petitioner. The Court held that the material forming the basis of a notice must be supplied to the assessee along with the notice — failing which, the assessee is deprived of a meaningful opportunity to respond.
3. Notice Was Utterly Vague
The SCN made allegations of excess ITC availed under Tables 8A and 8D of GSTR-9, ISD mechanism, RCM short payment, and undischarged tax liability — but provided no details, no working, and no basis for arriving at the figures demanded. The Court observed that after scrutinizing the notice, “one is left to wonder as to what was the basis for such allegations.”
What the Court Held
The Court articulated the law with commendable clarity:
“Before raising a demand, the purpose of putting an assessee to notice, is to make the assessee aware of the department’s intent to enable the assessee to effectively respond. A vague notice does not fulfil such object. Serving of a non-specific notice is nothing but an empty formality which is violative of the principles of natural justice.”
The Court also drew attention to Section 73(3) of the CGST Act, which mandates that where a notice is issued under sub-section (1) for one period, a statement containing details of tax not paid/short paid/ITC wrongly availed must be served for other periods. This requirement of furnishing “details” is an express statutory obligation — not merely a procedural courtesy.
Finding that the SCN was based on a wrong premise and was bereft of any details as required under Section 73(3), the Court set aside the notice dated 31.01.2024, while preserving the department’s liberty to proceed afresh in accordance with law.
Key Takeaways at a Glance
| Issue | Court’s Position |
| SCN based on factually wrong premise | Fatal — notice liable to be set aside |
| CAG report not supplied to assessee | Violates natural justice |
| Vague allegations without working/basis | Does not constitute a valid SCN |
| Section 73(3) obligation | “Details” must form part of the notice — mandatory, not directory |
Practical Significance
This judgment is a powerful reminder that a Show Cause Notice is not a mere formality to be issued mechanically. It is the foundation of the entire adjudication process. When the foundation is weak — factually incorrect or vague — the entire structure collapses.
For taxpayers currently facing SCNs that are:
- Based on CAG/audit objections without the underlying audit report being supplied;
- Containing bald allegations without computation or basis; or
- Relying on GSTR-9 table mismatches without explaining the methodology —
…this judgment offers a strong ground to challenge such notices before the appropriate forum.
This information note is prepared by Mohan & Chandrasekhar, Chartered Accountants for general awareness purposes only.
It does not constitute legal advice. Please consult your tax advisor before taking any action based on this note.