Notice to Notice-Givers: Courts Won't Tolerate Defective SCNs

A show-cause notice (SCN) is not a mere formality. It is the legal foundation of adjudication under Sections 73/74 of the CGST/SGST Acts. If the foundation is cracked-vague allegations, wrong dates, no hearing-the entire superstructure (order, recovery, even bank garnishee) collapses. Recent High Court rulings have made this abundantly clear, most recently in Reynard Corporate Solutions Pvt. Ltd. v. State of U.P. 2025(08)LCX0196, where an ex-parte Section 73 order and a DRC-13 garnishee fell because the initiating SCN itself was defective and natural justice was breached. The Court quashed the order and permitted a fresh SCN in accordance with law.

I. The Legal Architecture: What the Law Actually Requires

• Substantive trigger: Section 73 (non-fraud cases) / Section 74 (fraud/suppression etc.).

• Form & service: Rule 142 requires serving a notice and its DRC-01 summary electronically; the eventual order must be summarized in DRC-07.

• Personal hearing: Section 75(4)-an opportunity of hearing is mandatory where an adverse decision is contemplated or when the assessee requests it. Multiple HCs have treated this as a non-negotiable facet of natural justice.

• Adjournments: Section 75(5) permits up to three adjournments with reasons recorded.

• Scope of demand: Section 75(7) bars confirming amounts in excess of the SCN or on grounds not stated in the SCN. Courts have repeatedly enforced this ceiling.

• Service of notices: Section 169 prescribes the only valid modes of service. WhatsApp is not one of them (post-pandemic); service through WhatsApp has been held invalid by the Kerala High Court in Mathai M.V. (2025(06)LCX0301).

• Pre-SCN intimation (DRC-01A): After 15.10.2020,Rule 142(1A) is directory ("may"), not mandatory-still a good practice to narrow disputes.

II. What Went Wrong in Recent Cases (and Keeps Going Wrong)

1) Broken hearing logistics: non-existent, ill-timed, or perfunctory hearings

The classic pattern: the SCN fixes a personal-hearing date before the reply due date, or on the same day, or just mentions "N.A." for date/time; the final order bears a date divorced from the hearing record. In Mahaveer Trading Co., (2024(03)LCX0032) the Allahabad High Court flagged these exact defects and relied on Office Memo No. 1406 (12.11.2024) by the UP Commissioner (Commercial Tax), directing field formations to cure them. The Court set aside the order for breach of natural justice.

Reynard Corporate reprised this theme: the hearing was pre-dated (8 Jan 2025) even though the reply deadline was 31 Jan 2025. The Court quashed the ex-parte order and permitted a fresh SCN, emphasizing that defective initiation vitiates the proceedings.

2) No meaningful opportunity of personal hearing

Where an adverse decision is contemplated, Section 75(4) demands a real hearing, not a

box-tick. Allahabad, Madras and other High Courts have repeatedly set aside orders passed without granting (or actually affording) a hearing. The principle is settled: audi alteram partem is not optional.

3) Orders that exceed the SCN (Section 75(7) violations)

Another frequent flaw: the order demands more than the SCN proposed or travels on new grounds. High Courts have quashed such orders outright, reaffirming section 75(7). (See recent Allahabad HC rulings summarised by leading publishers.)

4) Improper service: WhatsApp ≠ service under Section 169

Post-COVID, sending notices or orders by WhatsApp is not a recognized mode under section 169. In Mathai M.V. v. Senior Enforcement Officer (2025(06)LCX0301), the Division Bench held WhatsApp service invalid, thereby undoing the proceeding for want of proper notice.

5) Vague, non-speaking SCNs

An SCN must spell out facts, exact contraventions, and quantification, and enclose or at least offer relied-upon documents (RUDs) (e.g., 2A/2B mismatch data, inquiry reports). Boilerplate allegations ("wrongly availed ITC", "excess turnover") without particulars deny fair defence.

6) Wrong provision or jurisdiction

Invoking Section 74 (fraud etc.) without laying the ingredients (intent to evade, suppression with intent, etc.) is a classic overreach. Likewise, jurisdictional defects-wrong ward officer, wrong registration, or clubbing unrelated entities-taint the SCN.

7) Consolidated SCNs across multiple financial years-handle with care

Courts have not per se barred consolidated SCNs; Delhi HC has, in suitable facts, upheld them if there is clear break-up, distinct reasons, and quantification for each period. The takeaway is not that consolidation is invalid, but that clarity and specificity are non-negotiable.

8) Timelines and limitation mis-handled

SCNs must be within limitation; orders must respect section 75 timelines. Any extension must be lawful, recorded, and communicated. Orders passed beyond the permissible period or post-hearing without reasons risk being quashed.

9) Template/portal errors creeping into substantive rights

"Auto-filled" N.A. for hearing details; incorrect DRC-01/DRC-07 mapping; mismatch between narration and quantification-these are not clerical trivialities; they can infect the legality of the proceeding itself (as UP's Office Memo 1406 openly acknowledged).

III. Consequences of a Defective SCN

Proceedings vitiated at the threshold. If initiation is flawed, the order and downstream actions (e.g., DRC-13 garnishee, bank debit freeze) fall with it. That is precisely what happened in Reynard Corporate.

• "Alternative remedy" bar relaxes. High Courts will entertain writs where natural justice is violated, even if an appeal lies. Mahaveer Trading clearly articulates this approach.

• Liberty to re-issue a valid SCN. Courts often quash the order but give the Department the liberty to start over (fresh, error-free SCN), preserving revenue's substantive rights while enforcing procedure. Reynard Corporate is the latest instance.

IV. Officer's Toolkit: How to Draft a Litigation-Proof SCN

A. Pre-draft hygiene

1. Choose the right section (73 vs. 74) and record reasons wherever "fraud/suppression" is alleged.

2. Assemble RUDs (returns mismatch, statements, third-party data) and index them. Offer inspection or attach extracts.

3. Consider a DRC-01A pre-intimation even after 15.10.2020; it is discretionary now but often narrows issues and demonstrates fairness.

B. Notice content essentials

• Facts: Narrate who, when, what, how much.

• Legal grounds: Cite provisions precisely, especially for 74 (mens rea).

• Quantification: Period-wise, head-wise (tax/interest/penalty), and registration-wise.

• RUD list: Enumerate and enclose or offer inspection.

• Compliance help: Clear reply date, mode of filing, and officer contact.

C. Hearing logistics (the minefield exposed by courts)

• Fix the reply due date first, and then a hearing date after it.

• Never put "N.A." under hearing date/time-enter actual values.

• Record hearing minutes and upload them.

• Synchronize the order date with the hearing record; do not pass an order bearing a date that pre-empts or post-dates the hearing without reasons.
  (All four are straight from the UP Commissioner's Office Memo 1406 and the Mahaveer/Reynard lines of cases.)

D. Service & recovery

• Serve as per Section 169-not WhatsApp; preserve service proofs.

• Use DRC-07 for order summary; ensure consistency with SCN.

• Do not issue recovery (e.g., DRC-13 to banks) while a valid hearing/decision is pending or when a court has intervened.

V. Taxpayer's Playbook: How to Diagnose and Challenge a Flawed SCN

A. Ten-point quick check

1. Provision & mens rea: Is 73/74 correctly invoked with reasons?

2. Specifics & quantification: Are the allegations particularized (period-wise, document-wise)?

3. RUDs: Are documents supplied or inspection offered?

4. Hearing plan: Is the hearing after the reply due date? Is date/time specified?

5. Service: Was service compliant with Section 169 (not WhatsApp)?

6. Section 75(7): Do the grounds/amounts align with the SCN, not just the final order?

7. Timelines: Within limitation? Any extensions recorded?

8. Jurisdiction: Correct officer, correct registration, correct period?

9. Consolidation: If multiple FYs are clubbed, are reasons and amounts distinct per FY? (Delhi HC accepts well-structured consolidation.)

10. Portal artifacts: Any "N.A." or contradictory dates? Flag them.

B. Tactical responses

• Ask for RUDs formally and seek adjournment (≤3) if needed, citing Section 75(5).

• Insist on personal hearing under Section 75(4); record requests in writing.

• File a detailed reply addressing facts, law, and quantification; append evidence.

• If 75(7) risk appears (order exceeding SCN), object immediately and preserve the ground for challenge.

• Challenge before High Court where there is patent natural-justice breach (no hearing, improper service, irrational dates). Mahaveer and Reynard reflect that writs lie even when appeals exist, in such circumstances.

• Seek relief against recovery (e.g., de-freezing bank under DRC-13) by demonstrating that the foundation order is vitiated.

VI. Special Focus Areas Where Errors Are Common

1. ITC mismatch cases (GSTR-2A/2B): The SCN must annex supplier-wise tables, specify missing credits, and explain Section 16 and Rule 36 breaches; broad accusations won't do.

2. Turnover reconciliation: Identify which entries are alleged as unreported and why; attach ledgers/STR analysis.

3. E-way bill/vehicle detention spillover: If the adjudication relies on a seizure/confiscation narrative, ensure proper service of the foundational notices-Mathai M.V. shows that invalid service poisons downstream adjudication.

4. Penalties under section 122/section 125: Quantify and legally justify penalty independent of tax demand; do not "auto-add" penalties without reasoning.

VII. Frequently Litigated Defects (with Quick Case Bites)

• Hearing denied or illusory: Orders set aside; memo-driven corrections mandated to field officers (UP Memo 1406, Mahaveer Trading).

• SCN defective at inception: Entire proceeding quashed, with liberty to issue fresh SCN (Reynard Corporate, 22 Aug 2025).

• Final demand exceeds SCN: Violates section 75(7); orders quashed (recent AHC line of cases).

• WhatsApp service invalid:section 169 not satisfied; proceeding undone (Mathai M.V., DB).

• Consolidated SCN across years: Not per se bad; valid if quantification and grounds are distinct and reasoned (Delhi HC tax alert).

VIII. Drafting & Process Checklists (Copy-paste and use)

A. For Officers (pre-issue & issue stage)

• ☑ Select 73 vs 74 correctly; record intent if choosing 74.

• ☑ Attach/offer RUDs (tables, statements, reports) and index them.

• ☑ Ensure clear narration with period-wise quantification.

• ☑ Fix reply deadlinebefore the hearing date; specify actual date/time-never "N.A."

• ☑ Mention place/mode of hearing (physical/VC) and officer contact.

• ☑ Check service strictly under section 169; retain proof.

• ☑ After hearing, reasoned order that does not exceed SCN (see section 75(7)).

• ☑ Upload DRC-07 summary consistent with the reasoned order.

B. For Taxpayers (defence stage)

• ☑ Acknowledge service and diarize deadlines.

• ☑ Demand RUDs; if absent, say so on affidavit.

• ☑ Request hearing in writing, cite section 75(4); seek up to three adjournments with reasons (section 75(5)).

• ☑ Challenge scope creep-object if the order threatens to exceed SCN (section 75(7)).

• ☑ If hearing logistics are flawed (pre-dated hearing, "N.A." time), document and object-these are recognized defects.

• ☑ Move writ on natural-justice grounds despite appeal remedy, where appropriate (Mahaveer, Reynard).

• ☑ Seek stay of recovery / de-freezing if the foundation order is under a cloud.

IX. A Note on Technology & Templates

Portals and templates help scale administration, but automation cannot dilute due process. Courts are now intimately familiar with portal artifacts-auto-filled "N.A." in hearing fields, mismatched dates, and canned allegations. UP's Office Memo 1406 specifically calls out these mistakes and directs field corrections. Treat that memo as minimum compliance hygiene, not optional advice.

X. Conclusion: Procedure Protects Substance

A well-drafted SCN accomplishes three things: (i) it alerts the taxpayer with precision, (ii) it records the Department's case coherently, and (iii) it anchors a fair adjudication. Courts are enforcing this equilibrium. Reynard Corporate shows that when the initiation is wrong, everything that follows is vulnerable; Mahaveer Trading confirms that natural justice trumps procedural bars like alternative remedies; Mathai M.V. reminds that service must be lawful, not convenient; and section 75(7) keeps adjudication inside the four corners of the SCN.

For officers, the fix is simple: precision, hearing, service, scope, and synchronization. For taxpayers, the defence is equally clear: audit the SCN, insist on RUDs and hearing, and if foundational defects persist, seek judicial review early. The result-fewer defective SCNs, fewer avoidable writs, and adjudication that is both efficient and just.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.