Home GST Tax Penalty Deemed Invalid If GST SCN Terms Are Conceded

Tax Penalty Deemed Invalid If GST SCN Terms Are Conceded

Tax Penalty Deemed Invalid If GST SCN Terms Are Conceded

Allahabad HC’s Order for M/S Rathore Building Material

Rathore Constructing Materials Vs Commissioner of State Tax (Allahabad Excessive Court docket)


In a ruling dated December 1, 2023, the Hon’ble Allahabad Excessive Court docket addressed the case of M/s. Rathore Constructing Materials v. Commissioner of State tax [Writ Tax No 136 of 2023. The court docket dominated that Rathore Constructing Materials, the petitioner, abided by the Present Trigger Discover (SCN) phrases by submitting returns inside the required 15-day interval. Regardless of this compliance, an unjust penalty was imposed on the petitioner, making the contested orders illegal and exhibiting a scarcity of consideration.

Key Data

M/s. Rathore Constructing Materials (“the Petitioner”) was served the Present Trigger Discover (“the SCN”) underneath Part 46 of the Central Items and Service Tax Act, 2017 (“the CGST Act”) by the Commissioner of State Tax (“the Respondent”) the place they had been requested to offer returns inside 15 days to withdraw the proceedings.

Afterward, the Petitioner supplied the returns inside the timeframe specified within the SCN. But, the Respondent issued the Order (“the Impugned Order”), imposing a penalty underneath Part 125 of the CGST Act. They famous the date of the Petitioner’s response and acknowledged no reply had been acquired, regardless of the opposite.

Thus, the applicant filed the writ petition earlier than the Hon’ble Allahabad Excessive Court docket.

Issues Arising from the SCN Phrases

If the penalty be levied when the petition complies with the phrases of the SCN?

Learn Additionally: Delhi HC Instructs Income Dept for Issuing GST SCN & Tax Demand in DRC 01 & DRC 02

Verdict on Factual Data

The Hon’ble Allahabad Excessive Court docket within the case of Writ Tax No. 136 of 2023 dominated underneath:

  • It was observed that the Respondent issued the Impugned Order, imposing a penalty, primarily based on the absence of a reply from the Petitioner to the SCN. This conclusion lacks correct consideration of the factual data, thus rendering it flawed.
  • Upon evaluation, it was noticed that the Petitioner had certainly fulfilled the phrases of the SCN by offering the mandatory returns inside the stipulated 15-day interval. As such, there was no legitimate motive to impose the penalty.
  • Consequently, it was decided that the Impugned Order contradicted the legislation and was made with out due consideration. Due to this fact, the Impugned Order needs to be invalidated.


The ruling from the esteemed Allahabad Excessive Court docket within the matter involving M/s. Rathore Constructing Materials versus the Commissioner of State tax establishes a precedent highlighting the absence of penalties when a Present Trigger Discover’s phrases are duly adopted. This resolution by the court docket prioritizes equity and fairness in making use of tax legal guidelines, aiming to stop pointless penalties for taxpayers who diligently observe the prescribed procedures.


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