Allahabad High Court Refuses to Quash SCN for Wrong Rubber Stamp:

The Allahabad High Court has declined to interfere with a show-cause notice issued under the Health Security se National Security Cess Rules, 2026, holding that no writ relief is warranted at the stage of a mere proposal and that the assessee must first respond to the notice and avail the statutory remedies available under law. A Division Bench comprising Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi dismissed the writ petition filed by M/s Dev Trading Company.

The dispute arose after the Assistant Commissioner, Central GST, Kanpur issued a show-cause notice proposing levy of cess on the petitioner, a manufacturer of pan masala. The petitioner challenged the notice as well as a subsequent corrigendum, contending that the department had ignored declarations already submitted regarding the mode of manufacture and installation of machines.

The petitioner submitted that it had initially informed the authorities that manufacturing activities for February 2026 would be carried out manually. Thereafter, separate declarations were furnished stating that one machine would be installed from March 2026 and a second machine from April 2026. According to the petitioner, despite these disclosures, the department proceeded on an incorrect assumption that two machines were installed during both March and April 2026.

The petitioner also questioned the jurisdiction of the issuing authority, arguing that under the Health Security se National Security Cess Act, 2025 and the Rules framed thereunder, jurisdiction did not vest with a CGST officer. It was further alleged that the show-cause notice reflected a pre-determined view against the assessee.

The Revenue opposed the writ petition, submitting that the notice merely proposed a demand and that no final determination had yet been made. It was argued that all factual issues, including the date of installation of machines, could be examined after the petitioner filed its objections. The department further contended that the relevant notifications empowered Assistant and Deputy Commissioners under the CGST framework to exercise jurisdiction under the cess regime.

“No final conclusion has yet been drawn. Subject to reply to the objections that the petitioner may file, the Assistant/Deputy Commissioner may pass appropriate order dealing with those objections.”

The High Court agreed with the Revenue and observed that the impugned notice was only a preliminary step in the adjudication process. The Court held that the proposal contained in the show-cause notice did not carry any finality and remained subject to consideration of the petitioner’s objections.

On the jurisdictional challenge, the Court found no merit in the petitioner’s argument. It noted that the relevant government orders specifically vested jurisdiction in Assistant and Deputy Commissioners under the Rules. Merely because the officer had used a CGST designation or stamp did not create any defect in jurisdiction.

“Once authority created under the Act read with the Rules does vest in the signatory to the show-cause notice, no material difference or lack of jurisdiction may arise for reason of wrong/other rubber stamp impression affixed below that signature.”

Thus, the High Court dismissed the writ petition and directed the petitioner to pursue the statutory process by filing a further reply to the corrigendum notice within two weeks. The adjudicating authority was directed to consider all replies and pass a reasoned and speaking order in accordance with law.

To Read Full Judgment, Download PDF Given Below.