Order Under GST Can Not Be Passed Without Serving Proper Notice Under
Rule 142(1A) Of The CGST Rules - Andhra Pradesh High Court
Introduction:
The case of BABA
AGRICULTURE EXPORT v. Union of India & Others is an important judgment
by the Andhra Pradesh High Court that deals with one of the most common
procedural mistakes made by tax officers under GST law — passing an order
without properly issuing a pre-show-cause consultation notice. The Court held
that such an order is void ab initio, meaning it has no legal existence
from the beginning, because it violates both the law and principles of
natural justice.
This case clearly shows
that the GST Department must strictly follow the legal procedure laid down
under the Central Goods and Services Tax (CGST) Act, 2017, and that
taxpayers cannot be forced to accept orders passed in violation of mandatory
provisions.
Case
Details
The case was heard by the
High Court of Andhra Pradesh at Amaravati. The Bench consisted of Justice
R. Raghunandan Rao and Justice T.C.D. Sekhar. The case was numbered Writ
Petition No. 24140 of 2025, and the order was delivered on 8th October
2025.
The petitioner in this
case was BABA AGRICULTURE EXPORT, a partnership firm located in Guntur,
Andhra Pradesh, represented by its managing partner Mr. Shaik Baji. The
respondents were the Union of India, represented by the Secretary of the
Ministry of Finance, and two senior GST officers — the Assistant
Commissioner of Central Tax, Guntur, and the Superintendent of Central
Tax, Patnam Bazar Range, Guntur.
The petitioner was
represented by Advocate Vadlapatla Sai Mallik, and the respondents were
represented by Standing Counsel B.V.S. Chalapati Rao.
Background
of the Case
Baba Agriculture Export
is engaged in the export of agricultural products and is a registered GST
taxpayer. During 2024, the department alleged that the firm had availed excess
Input Tax Credit (ITC) and initiated proceedings under Section 73 of the
CGST Act, 2017, which deals with tax recovery in cases not involving fraud.
On 25th November 2024,
the department issued a Show Cause Notice (SCN) bearing Document
Identification Number (DIN) 20241155YK000000AD51. Later, the department
passed an Order-in-Original No. 70/2024-25-GST on 25th February 2025,
demanding recovery of tax, interest, and penalty from the petitioner.
However, the main issue
raised by the petitioner was that this order was passed without serving a
pre-show-cause consultation notice, which is mandatory under Rule
142(1A) of the CGST Rules, 2017. This rule requires that before issuing a
formal show-cause notice, the department must first communicate the details of
tax, interest, and penalty to the taxpayer in Form GST DRC-01A, allowing
them a chance to voluntarily pay the tax and avoid litigation.
The petitioner also
argued that no proper personal hearing was granted under Section
75(4) of the CGST Act. The show-cause notice was merely uploaded on the GST
portal without actual communication, which amounted to constructive
non-service.
Reliefs
Sought by the Petitioner
The petitioner approached
the High Court under Article 226 of the Constitution of India, which
gives citizens the right to seek relief when their legal or fundamental rights
are violated. The petitioner requested the Court to quash both the Show
Cause Notice dated 25.11.2024 and the Order-in-Original dated 25.02.2025,
declaring them void and illegal.
It was also requested
that the Court declare Notification No. 56/2023-Central Tax dated 28.12.2023
— which extended the time limit for issuing orders under Section 73 — as ultra
vires (beyond legal power), because there was no valid reason or statutory
backing to extend such limitation. The petitioner also sought an interim stay
on all recovery proceedings, garnishee orders, and other coercive actions.
Arguments
Made by the Petitioner
The petitioner’s counsel,
Mr. Sai Mallik, argued that the entire order was illegal because
the department failed to issue a notice under Rule 142(1A). This rule is
mandatory and ensures that the taxpayer gets an opportunity to make voluntary
payment before any formal action is taken. The failure to follow this rule
makes the proceedings void from the start.
He also argued that the
petitioner was not given a proper personal hearing, as required under Section
75(4), which mandates that an opportunity of hearing must be granted before
passing any adverse order. The mere uploading of a notice on the GST portal,
without personal or email communication, cannot be treated as valid service.
The counsel further
pointed out that the order was barred by limitation under Section
73(10), which allows a maximum of three years to pass such orders. The
extension of limitation through Notification No. 56/2023 was challenged
on the ground that it was issued without any valid legislative authority or
justification like a force majeure event.
Finally, the petitioner
contended that even though an appellate remedy is available under Section 107
of the CGST Act, it does not prevent the High Court from intervening when an
order is passed without jurisdiction or in violation of the principles of
natural justice.
Arguments
Made by the Respondents
On the other hand, the
Standing Counsel for the GST Department, Mr. B.V.S. Chalapati Rao,
defended the actions of the department. He argued that the petitioner was well
aware of the proceedings and even attended the hearing, during which they
requested more time. Hence, it could not be said that there was non-service of
notice or violation of natural justice.
The counsel also
contended that the petitioner had an alternative and effective remedy —
that of filing an appeal under Section 107 of the CGST Act — and therefore, the
writ petition should not be entertained by the High Court.
He also maintained that
the department’s actions were taken in good faith to protect government
revenue and that any small procedural lapse should not be treated as a ground
to invalidate the entire proceedings.
Legal
Issues Before the Court
After hearing both
parties, the High Court examined three key questions:
1. Whether
the non-issuance of a pre-show-cause notice under Rule 142(1A) vitiates
the entire adjudication process under Section 73 of the CGST Act.
2. Whether
the petitioner can directly approach the High Court under Article 226,
despite the availability of an appellate remedy.
3. Whether
the impugned Order-in-Original dated 25.02.2025 was barred by
limitation under Section 73(10).
Findings of
the Court
The Court delivered a
well-reasoned judgment and made several important observations.
First, the Court noted
that Rule 142(1A) is not optional. It is a mandatory step before
initiating any proceedings under Section 73 or 74 of the CGST Act. The purpose
of this rule is to give taxpayers a fair opportunity to pay the tax voluntarily
and to avoid unnecessary litigation. Non-compliance with this requirement means
the entire proceeding is illegal.
Secondly, the Court held
that there was a clear violation of natural justice. The authorities did
not serve a proper notice or provide an effective opportunity of hearing. The
alleged service of notice through portal upload was insufficient and amounted
to constructive non-service. Thus, the procedure followed by the
department was contrary to Section 75(4), which ensures that no adverse
order can be passed without giving the taxpayer a fair chance to defend.
Thirdly, the Court
rejected the argument regarding alternative remedy. It held that when an
order is passed without jurisdiction or in clear violation of legal
provisions, the existence of an appellate remedy cannot bar the High Court
from exercising its power under Article 226. The Court emphasized that writ
jurisdiction is meant to correct such fundamental legal errors.
Finally, regarding limitation,
the Court observed that although the petitioner challenged the notification
extending time limits, the focus should be on conducting the adjudication
strictly according to law after issuing a valid notice. The Court avoided
striking down the notification but stressed that limitation provisions must be
applied strictly.
Final
Judgment
After considering all the
facts, the Andhra Pradesh High Court allowed the writ petition. The
Court set aside the Order-in-Original No. 70/2024-25-GST dated 25.02.2025
issued by the Assistant Commissioner, Guntur, under Section 73 of the CGST Act.
The case was remanded
back to the assessing authority to conduct the proceedings again in
accordance with law. The Court directed the officer to first issue a proper
notice under Rule 142(1A), give the petitioner a reasonable opportunity to
respond, and only then proceed to determine the liability.
The Court also clarified
that the time period between the date of the impugned order and the receipt
of this judgment will be excluded from limitation calculation, so
that the department can restart proceedings without facing limitation issues.
The Court did not award any costs and closed all pending miscellaneous
applications.
Conclusion
This judgment is an
important reminder that tax authorities must strictly follow the due process
of law while conducting assessments and recovery proceedings under GST. The
High Court made it clear that a taxpayer cannot be penalized through hurried or
arbitrary actions by the department. The issuance of a pre-show-cause
consultation notice under Rule 142(1A) and the granting of a personal
hearing under Section 75(4) are mandatory steps, not mere
formalities.
The Court’s decision
protects taxpayers from unfair assessments and ensures that every action by the
GST Department must be transparent, reasonable, and legally sound. It also
reinforces the idea that compliance with procedure is a part of justice
itself.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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