The High Court of Himachal Pradesh has quashed a GST show cause notice issued against M/s Amit Engineers, holding that proceedings initiated contrary to a binding Advance Ruling are unsustainable in law.

A Division Bench comprising Justice Vivek Singh Thakur and Justice Ranjan Sharma allowed the writ petition filed by the assessee and set aside the show cause notice dated 14.02.2025 issued by the Directorate General of GST Intelligence (DGGI) under Section 73(8) of the CGST Act.

The petitioner challenged the notice on the ground that the issue raised therein already stood covered by an Advance Ruling dated 11.04.2022, which had attained finality as the department never challenged it before any appellate forum.

The Advance Ruling had held that “Roof Mounted AC Package Units” manufactured as per Railway specifications and supplied exclusively to Indian Railways were classifiable under Chapter 86.07 of the GST Tariff.

Despite the said ruling, the department issued the impugned show cause notice demanding GST and directing the petitioner either to make payment within thirty days or file a reply along with supporting evidence.

Before the High Court, the department argued that the petitioner ought to have responded to the show cause notice and availed the statutory appellate remedy under the CGST Act instead of directly invoking writ jurisdiction.

However, the High Court observed that the Advance Ruling remained binding upon the authorities as it had neither been challenged nor declared void under Section 104(1) of the CGST Act.

“In view of the finality attached to the Advance Ruling between the parties, the show cause notice dated 14.02.2025 was without foundation.”

The Bench further held that once the Advance Ruling had attained finality, the impugned notice itself became non-est and no further adjudication was required on the same issue.

“In view of the finality of the advance ruling between the parties, the notice is not sustainable and nothing is required to be adjudicated.”

The Court clarified that although ordinarily an assessee is expected to file a reply to a show cause notice, writ jurisdiction under Article 226 of the Constitution can be exercised where the notice itself is ex facie contrary to settled law.

Thus, the High Court quashed the impugned show cause notice and allowed the writ petition in favour of the assessee.