Show cause notice fixing personal hearing before the reply due date is invalid; consequential assessment and appellate orders quashed.

Case: M/s R.P. Industries v. State of U.P. & Others
Citation: Writ Tax Nos. 811 & 813 of 2022
Court/Bench: Allahabad High Court
Coram: Hon’ble Piyush Agrawal, J.
Date of Decision: 29-08-2025

Whether proceedings under Section 74 can sustain when the show cause notice fixes the date of personal hearing prior to the last date allowed for filing reply.

Petitioner purchased iron scrap in December 2018 from M/s Rahul Trading Company.

Notice under Section 74(1) dated 16.07.2020 alleged supplier was not found at its business premises.

SCN required reply by 17.08.2020 but fixed personal hearing on 24.07.2020 (earlier than the reply deadline).

Ex parte order dated 28.08.2020 imposed tax/penalty; appeal dismissed on 06.09.2021.

It was held that the show cause notice was fundamentally defective as it scheduled personal hearing before the reply due date; once the SCN is bad, the entire proceedings fail. The impugned assessment and appellate orders were quashed. The Assessing Authority was directed to issue a fresh SCN within 15 days; the petitioner may reply as per the notice, and proceedings shall conclude within two months from receipt of reply. Amounts already deposited will abide the fresh outcome.

A show cause notice that curtails the opportunity to respond by fixing hearing prior to the reply deadline violates due process and vitiates ensuing proceedings.

Review past and pending SCNs for procedural infirmities—especially mismatched hearing/reply dates. Where such defects exist, consider promptly challenging the notices/orders. Maintain complete documentation (purchase details, supplier verification, transport records) to support merits once a valid SCN is issued.