Article 226 Can't Be Invoked Against An SCN Issued U/S 74 Of CGST Act At Preliminary Stage: Kerala High Court

“Article 226 of the Constitution of India is not meant to be used to break the resistance of the Revenue in this fashion. In exercise of such jurisdiction, the High Court is required to refrain from issuing directions to the authorities under the taxation statute to decide issues in stages or on a preliminary basis,” stated the Division Bench of Justices A.K. Jayasankaran Nambiar and Easwaran S.

In this case, a show cause notice was issued requiring the assessee to show cause as to why an amount of Rs.4,88,56,298/- shall not be assessed as short paid on detection of suppression of outward supply for the periods 2017-18 to 2023-24 and a further amount of Rs.11,85,843/- shall not be imposed as flood cess.

The assessee/respondent had filed a writ petition challenging the show cause notice issued under Section 74 of the CGST Act.

The Single Judge ordered that the authorities under the SGST Act, 2017 will consider the preliminary issue raised by the assessee against the invocation of Section 74 thereof, especially with regard to the contention of the petitioner/assessee that a part of the alleged suppressed turnover belongs to a separate entity belonging to her husband with a separate registration.

Aggrieved by the above order, the department has filed an appeal contending that the scheme of the CGST Act/SGST Act does not envisage separate orders being passed in the nature which has been directed by the Single Judge.

The bench after looking into Section 74 of the CGST Act/SGST Act observed that there is no provision enabling either the assessee to claim adjudication in stages nor has any power being conferred upon the proper officer to adjudicate the lis in stages.

The bench opined that “the power of the High Court under Article 226 of the Constitution of India cannot be invoked by the assessee, who is faced with a notice under Section 74 seeking a part adjudication of the lis, which is pending before the proper officer. Of course, in a given situation, when it is alleged that there is a total lack of jurisdiction in issuance of the show cause notice, the High Court may exercise its discretion in entertaining the writ petition. But, as a general rule, the writ petition against the issuance of a show cause notice under Section 74 of the CGST Act/SGST Act cannot be entertained.”

The bench held that the jurisdiction of the High Court under Article 226 of the Constitution of India cannot be allowed to be exploited by those who can afford to wait to the detriment to those who cannot afford to wait by dragging the latter to the court for adjudication on peripheral issues, avoiding decision on the issues more vital to them.

In view of the above, the bench allowed the appeal.

Case Title: The Deputy Commissioner (Intelligence) v. Minimol Sabu

Citation: 2025 LiveLaw (Ker) 130

Case Number: WA NO. 238 OF 2025

Counsel for Appellant/ Department: Resmitha Ramachandran

Counsel for Respondent/ Assessee: Akhil Suresh

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