NOVEMBER 05, 2025

Three Days Grace, One Day Disgrace

By Vijay Kumar

GST officers, among other powers, can audit a taxpayer-and they pursue it like a mission, not a mandate.

A taxpayer had the honour of receiving an audit notice dated 11th January, 2024 for the Financial Year 2017-18 (from 1st July, 2017) to Financial Year 2022-23. Several letters were issued to the taxpayer and information was sought in the form of documents and clarifications which were duly supplied vide letters dated 22nd February, 2024, 19th April, 2024, 6th September, 2024 and 24th September, 2024.

A draft audit report was prepared by the Department and certain clarifications were sought on 4th October, 2024. The reply was given by the taxpayer on 11th October, 2024.

After the reply was submitted, a pre-Show Cause Notice ('pre-SCN') was issued on 25th November, 2024 to which a reply was permitted to be filed within three days. Surprisingly, the GST Department couldn't wait even three days-and issued the Show Cause Notice on 27th November, 2024.

The taxpayer challenged this premature SCN by a writ petition in the Delhi High Court. - VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PVT LTD Vs UNION OF INDIA AND ORS - 2025-TIOL-1747-HC-DEL-GST

The pre-SCN itself had laid down the terms clearly:

You are hereby advised to pay the amount of tax as ascertained above along with the amount of applicable interest and penalty under Section 74(5) by 28/11/2024, failing which Show Cause Notice will be issued under Section 74(1).

In case you wish to file any submissions against the above ascertainment, the same may be furnished by 28/11/2024 in Part B of this Form.

This letter has been issued on the basis of discrepancies observed so for during the audit conducted on the basis of information/details/documents submitted by you. In case any contradiction, misinformation and/or non-Information on part of the audited entity comes into the notice of the department/ Audit Commissionerate / or any other tax authority in future, the Department keeps its right reserved to take action and further examine the Issue.

As the extract makes it painfully clear, the taxpayer was given time till 28th November, 2024. However, astoundingly, the GST officer decided to issue the SCN itself one day before the said day expired i.e. on 27th November, 2024.

The High Court noted that this was a clear violation of the principles of natural justice-even by the Department's own timeline in terms of the pre-SCN itself.

The High Court set aside the SCN. The proceedings are relegated to the pre-SCN stage. The Petitioner is now free to file its reply to the pre-SCN dated 25th November, 2024 on or before 10th November, 2025.

But the taxpayer had already filed the preliminary reply to the pre- SCN dated 25th November, 2024.

So, the High Court directed that, if any further reply is to be filed to the pre-SCN, the same may be filed on or before 10th November, 2025. After considering the said reply, the concerned authority shall decide as to whether the SCN is to be issued or not and if any SCN is issued, the same shall proceed in accordance with law.

The writ was filed in the High Court on 24th January 2025 and the case was listed on six dates and heard by two judges with assistance from six lawyers and supporting personnel, all because a GST officer couldn't wait a single day. What prompted the GST officer to issue a notice one day prior to the date he himself fixed? Is it absolute contempt for responsibility, law, procedure, official protocol and judicial superintendence? Is it a total "don't care" attitude? Is it the belief that nothing is going to happen to him? Or is it a wish to contribute to the already-falling-under-its own weight-judicial dockets in the country. The Delhi High Court has over 1,22,000 cases pending and perhaps the GST officer wants to contribute to this mounting number.

Is it not audacious that you give your taxpayer three days to reply to the pre-SCN, and even before those three days are over, you are ready with your notice-like a chef who serves dessert before the soup, then blames the guest for indigestion?

Something is terribly wrong. Not just with the process, but with the mindset. When the tax officer becomes both the clock and the hammer, when timelines are ornamental and discretion is whimsical, we are no longer in the realm of law- we are in the realm of ‘Chalta Hai' jurisprudence."

If you have tears, prepare to shed them now. Not for the taxpayer alone, but for the idea of procedural fairness, which lies gasping under the weight of bureaucratic impatience. The officer could not wait 24 hours. But the taxpayer must now wait over a year, spend on lawyers, and navigate the judicial maze-just to reclaim the time he was already granted.

O, what a fall, my countrymen! When the officer jumped the gun, it wasn't just a lapse-it was a collapse - of trust; of process; of the very idea that the State is a disciplined litigant. And in that fall, we all fell. Because every such act chips away at the credibility of the system we are all bound to uphold.

Then I, and you, and all of us fell down. Not in protest, but in resignation. Because we have normalized the abnormal. We have accepted that some officers will act first and think later, that the taxpayer must always be on the back foot, and that the courts will mop up the mess-eventually.

O judgment! Where have you fled to? And have officers lost their reason? Or is reason now a luxury, unaffordable in the age of targets, dashboards, and performance metrics? When revenue is king, and compliance is a race, who has time for natural justice?

Maybe we should reverse the procedure altogether. Let's embrace the spirit of pre-emptive governance:

1. First, issue an Order-cum-Demand-no need for niceties like draft reports or pre-SCNs.

2. Then ask the taxpayer whether he accepts the order. If yes, great. If not,

3. Invite him to explain why he disagrees.

4. After reading his reply (or skimming it), inform him that his reply has been duly considered-and the original order stands confirmed.

5. He may appeal within three months. But just to keep things exciting, his bank account can be attached before he goes in appeal.

This way, we save time, reduce paperwork, and keep the taxpayer on his toes. After all, justice delayed is justice denied-and justice pre-decided is efficiency personified.

Can I ever trust that just are the ways of my GST officers, and justifiable to the taxpayers? Or must I now accept that the system runs not on fairness, but on the assumption that the taxpayer will comply, complain, and carry on-because resistance is futile, and redress is delayed?

Whatever you do, revenue is flowing into the treasury unabated with nearly two lakh crores GST collected last month. So perhaps officers feel entitled to a little mischief. A little procedural misadventure. After all, what's a day here or there, when the coffers are full and the courts are far?

When two children in a house were offered two pieces of chocolate, the younger one took the larger piece. "It's not etiquette," said the elder one, "I would have taken the smaller piece."

"What's your problem?" asked the younger one, "you got what you wanted, no?" That is the new jurisprudence. As long as the taxpayer eventually gets the SCN, what's the harm in a little leapfrogging?

The taxpayer here was aggrieved that he got a Show Cause Notice one day before his allotted time to reply to the pre-SCN. Even if they had waited, he would have got the same SCN. But now, he gets it after a year, after a writ, after legal fees, after judicial time. So, what did we gain?

A procedural shortcut that led to a judicial detour - and a taxpayer's scenic tour of the High Court.

What could anyone learn? That there's no point in disputing what the all-knowing taxmen say-especially about silly things like limitation, natural justice, and due process. These are quaint concepts, best reserved for textbooks and seminars. In the real world, the officer decides, the taxpayer complies, and the courts sigh.