Ms Diamond Steel Industries vs. State Of Punjab And Others

Facts

The petitioner, M/s Diamond Steel Industries, challenged an order dated 27.01.2026, which imposed a demand under Section 74-A(1) read with Section 74A(5)(i) of the Central Goods and Services Tax Act, 2017. The petitioner contended that this demand was made without any prior notice. The State of Punjab and others were the respondents. The High Court was presented with this matter for adjudication.

Held

The Court held that the impugned demand dated 27.01.2026 was not preceded by any notice. Consequently, the Court set aside the said demand. However, liberty was granted to the respondent-State to proceed afresh against the petitioner in accordance with the law. This implies that the revenue can initiate the process again, but this time must follow the due procedure, including issuing a notice to the petitioner. The ratio decidendi is that any demand under the CGST Act, particularly under Section 74A, must adhere to the principles of natural justice, which mandate prior notice and an opportunity to be heard before any adverse order is passed.

Key Issues

1. Whether the demand raised against the petitioner under Section 74-A(1) read with Section 74A(5)(i) of the CGST Act, 2017, is legally sustainable when it was not preceded by any notice whatsoever? Petitioner's Contention: The petitioner argued that the demand order dated 27.01.2026 was invalid because it was issued without providing any opportunity of being heard or issuing a show-cause notice, thereby violating principles of natural justice. Revenue's Contention: The judgment does not record any specific arguments presented by the respondents (State of Punjab and others).