Quashing Demand Based on Defective Mismatch SCN and Remanding Case Due to Natural Justice Violations

By | October 15, 2026
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Quashing Demand Based on Defective Mismatch SCN and Remanding Case Due to Natural Justice Violations

Issue

Whether an adjudication order and appellate order confirming ITC disallowance can be sustained when the Show Cause Notice (SCN) lacked full particulars, mismatch charts were not provided to the assessee, and adequate personal hearing was denied.

Facts

  • Disallowance of ITC: The State GST Department disallowed the appellant’s Input Tax Credit (ITC) on the grounds of a mismatch.
  • Issuance of SCN: A Show Cause Notice (SCN) was issued under Section 73, and the adjudicating authority confirmed the tax demand.
  • First Appeal Dismissed: The first appellate authority dismissed the assessee’s appeal and upheld the demand.
  • Lack of Material Particulars: The SCN lacked full particulars, and no mismatch chart/details were placed before or evaluated by the adjudicating authority.
  • First Appearance of Material before Tribunal: A detailed mismatch chart surfaced for the first time before the Tribunal, having been absent during both adjudication and first appellate stages.
  • Denial of Hearing: The first appellate authority failed to afford an adequate personal hearing to the appellant before deciding the case.

Decision

  • Violation of Natural Justice: Issuing an SCN devoid of material particulars and mismatch charts disabled the assessee from making an effective rebuttal, amounting to a gross breach of principles of natural justice at both adjudication and appellate levels.
  • Impugned Order Set Aside: The Tribunal set aside the impugned appellate order.
  • Remand for De Novo Adjudication: The matter was remanded back for de novo adjudication with specific directions to supply full mismatch details to the assessee and grant a sufficient personal hearing.
  • Open Issues: All substantive issues were kept open for fresh consideration. (Matter remanded)

Key Takeaways

  • Defective SCN Vitiates Proceedings: An SCN under Section 73/75 must contain complete material particulars and backing evidence (such as mismatch charts); vague notices violate natural justice and render orders unsustainable.
  • Right to Effective Rebuttal: Taxpayers must be provided with all underlying documents relied upon by the department prior to adjudication to ensure a fair opportunity to defend.
  • Mandatory Hearing Requirement: Denial of adequate personal hearing at either the original or appellate stage constitutes a fatal procedural flaw requiring de novo re-adjudication.
GOODS AND SERVICE TAX APPELLATE TRIBUNAL , THANE BENCH
Vikram Inderjit Kapur
v.
Chandrakant Dhondiram Jadhav
Ramesh Nair, Judicial Member
and Prallhad S. Paranjape, Technical Member
APL/10/THN/2026
OCTOBER  7, 2026
Surinder Mehra, Chartered Accountant for the Appellant. Surinder Mehra, Deputy Commissioner for the Respondent.
ORDER
1.The brief fact of the case is that the SGST department disallowed the Input Tax Credit on the ground of mismatch of ITC. Show cause notice was issued and the adjudicating authority confirmed the proposed demand of ITC. Against the said Order-In-Original, in the appellant’s appeal, the first appellate authority dismissed the appeal. Hence the present appeal.
2.Shri Surinder Mehra appearing on behalf of the appellant at the outset submits that the adjudicating authority has neither given details of mismatch in the show cause notice nor provided thereafter to explain the mismatch. He submits that if overall period is taken then there is no mismatch and the appellant is entitled for the ITC correctly. He also submits that the learned first Appellate Authority has not given sufficient hearing as on the second date of hearing the appellant sought for an adjournment thru email communication, which was not granted and ex-parte order was passed.
3.Shri Chhagan Jaybhay, learned Deputy Commissioner, Authorized Signatory appearing for the State GST department, Respondent submits that the detail chart of ITC mismatch was submitted on the portal yesterday 06.10.2026 only.
4.We have heard both sides and perused the records. We find that in the present appeal the question of law involved is that whether the appellant is entitled for the Input Tax Credit in terms of Section 16 of the CGST Act, 2017 read with the Maharashtra GST Act, 2017 in the fact that the lower authorities disallowed the ITC on the ground of mismatch.
5. We find that in the show cause notice the details of mismatch was not given fully enabling to the appellant to explain their case. The detail chart of mismatch was submitted by the learned AR only now which was not before the adjudicating authority. Moreover, the learned Appellate Authority has not given sufficient opportunity of personal hearing to the appellant. With this undisputed fact, we observe that there is gross violation of the principles of natural justice at every stage i.e. Adjudication as well as by the appellate authority. Therefore, we are of the view that entire matter needs to be reconsidered on all aspects by the adjudicating authority. Needless to say that the adjudicating authority shall grant the sufficient opportunities to the appellant to explain their case after the details of mismatch is provided to the appellant. Since, we have not examined other issues, all the issues are kept open. With the above observation, the impugned order is set aside and matter is remanded to the adjudicating authority for passing a reasoned de novo order, preferably within a period of 3 months from the date of this order. Appeal is disposed of in the above terms.