Matter remanded for fresh adjudication; Impugned Order to be treated as SCN Addendum

Issue

Whether an adjudication order (DRC-07) should be sustained when the petitioner had already paid the entire demand amount (as per the intimation) via Form DRC-03 prior to the order, but failed to file a formal reply to the Show Cause Notice (SCN), and whether the impugned order can be converted into an addendum to the SCN to allow a fresh opportunity for hearing.

Facts

Period: April 2020 to March 2021.
The Sequence:
1. Intimation (DRC-01A): Issued raising demand under IGST, CGST, and SGST.
2. SCN (DRC-01): Issued subsequently (dated 09.02.2024) quantifying a reduced liability with penalty.
3. Payment: Post-SCN, the Petitioner paid the entire demand raised in the initial intimation via Form DRC-03.
4. Notification: This payment was intimated to the department via Form DRC-06 before the adjudication order was passed.
5. The Lapse: The Petitioner failed to file a formal written reply to the SCN.
The Order: The Respondent passed the adjudication order (DRC-07 dated 12.12.2024) and later issued a suo motu rectification order enhancing the interest liability.
The Plea: The Petitioner challenged the order, seeking a remand to explain their case and requested that the DRC-07 be treated merely as an addendum to the SCN so they could file a reply.

Decision

Payment Acknowledged: The High Court noted the submission that the entire tax demand had already been discharged.
Opportunity Restored: To ensure principles of natural justice and proper verification of the payments made, the Court decided to set aside the finality of the adjudication.
Order converted to SCN Addendum: The Court directed that the impugned order (DRC-07 dated 12.12.2024) be treated as an addendum to the original Show Cause Notice (dated 09.02.2024).
Ruling: The matter was remitted (remanded) for fresh adjudication. The Petitioner was granted liberty to file a detailed reply with supporting documents (proof of payment) to the SCN read with the addendum.

Key Takeaways

Payment is not enough, Reply is mandatory: Even if you pay the tax via DRC-03, if an SCN (DRC-01) has been issued, you must file a formal reply submitting the proof of payment. Silence leads to an ex-parte order (DRC-07).

“Order as Addendum”: This is a specific legal relief often granted by High Courts in writ jurisdiction. It effectively rewinds the clock—converting a final demand order back into a notice—giving the taxpayer a second chance to file a reply without paying the heavy pre-deposit required for an appeal.

HIGH COURT OF MADRAS

Rajkumar Rope Merchant

State Tax Officer (FAC) E, Tamil Nadu^*

C. Saravanan, J.

WP No. 42643 of 2025
WMP NO. 47703, 47705 and 47694 OF 2025

NOVEMBER 6, 2025

N. Murali DIVYA for the Petitioner. Mrs. K. Vasanthamala, Government Adv. for the Respondent.

ORDER

1. Mrs. K. Vasanthamala, learned Government Advocate takes notice for the Respondent.

2. This Writ Petition is being disposed of at the time of admission with the consent of the learned counsel for the Petitioner and learned Government Advocate for the Respondent.

3. In this Writ Petition, the Petitioner has challenged the impugned Order in FORM GST DRC-07 dated 12.12.2024 of the Respondent, which was preceded by a Show Cause Notice in GST DRC-01 dated 09.02.2024 for the tax period between April 2020 and March 2021.

4. The petitioner is before this Court against the impugned order dated 12.12.2024 after suo motu rectification on 24.12.2024, whereby the interest component has been increased.

5. The learned counsel for the petitioner submits that the petitioner was issued with notice in DRC-01A dated 05.04.2023, wherein a total amount of Rs.1,28,970/- was demanded as the tax due for IGST, CGST and SGST.

6. The learned counsel for the petitioner submits that subsequently, further notice was issued in DRC-01 dated 09.02.2024, wherein the demand was confirmed to a sum of Rs.43,518/- alone (Rs.11,759/- towards CGST and SGST apart from penalty of Rs.20,000/-).

7. The learned counsel for the petitioner submits that after the above notice was issued to the petitioner, the petitioner has discharged the entire amount that was demanded vide intimation in form DRC-01A dated 05.04.2023 for a sum of Rs.1,28,970/- and has also filed form DRC-06 to that effect on 21.11.2024.

8. The reasons stated in the affidavit for paying the above amount are as under:

“I submit that I was not able to withstand the pressure created by the First Respondent regarding payment of tax. Therefore, I paid the entire tax demand of Rs.1,28,970/- in DRC-03 dated 21-11-2024 and intimated the same in Form DRC-06 dated 21-11-2024. I submit that though the show cause notice demanded less sum, I was forced to pay the tax demand as per DRC-01A.”

9. The learned counsel for the petitioner submits that since the petitioner fails to respond to the notice dated 09.02.2024, the impugned order dated 12.12.2024 has been passed and hence, prays for remand since no reply was filed by the petitioner.

10. The learned Government Advocate appearing for the respondents would submit that there is only typographical error in the notice dated 09.02.2024 and therefore, the demand that was confirmed vide order dated 12.12.2024 is correct and therefore, the order dated 12.12.2024 does not warrant any interference.

11. Considering the submissions made by the learned counsel for the petitioner and the learned Government Advocate appearing for the respondents, and considering the fact that the entire amount of Rs.1,28,970/- has been paid by the petitioner on 21.11.2024, the case is remitted back to the respondents to pass a fresh orders subject to the Petitioner filing a proper reply to the Show Cause Notice in GST DRC-01 dated 09.02.2024 together with requisite documents to substantiate the case by treating the impugned Order dated 12.12.2024 as an addendum to the Show Cause Notice dated 09.02.2024.

12. In case the Petitioner complies with the above stipulations, the Respondent shall proceed to pass a final order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months of such reply/pre-deposit. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner shall also stand automatically raised/vacated.

13. In case the Petitioner fails to comply with any of the stipulations, the Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.

14. Needless to state, before passing any such order, the Respondent shall give due notice to the Petitioner.

15. This Writ Petition stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.