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September 2, 2023

Ensuring Fair Taxation: The Skyline Automation Industries vs. State of U.P.

Ensuring Fair Taxation: The Skyline Automation Industries vs. State of U.P.


Skyline Automation Industries has initiated a legal battle against the Revenue Department of Uttar Pradesh. This writ petition aims to challenge a demand order issued by the Revenue Department on the grounds that crucial procedural steps were overlooked prior to its issuance.


In this legal dispute, Skyline Automation Industries contests an order dated November 10, 2022, handed down by the Revenue Department under Section 74(9) of the Central Goods and Services Tax (CGST) Act. The core contention here is that the order lacks legitimacy due to non-compliance with the provisions outlined in Rule 142(1A) of the CGST Rules.

The Key Issue:

 The pivotal issue at stake revolves around whether it is obligatory for the Revenue Department to serve a Show Cause Notice (SCN) before rendering a demand order, thereby ensuring that taxpayers are afforded a fair and equitable opportunity to respond.

Arguments Presented:

Skyline Automation Industries puts forth a compelling argument, asserting that Rule 142(1A) of the CGST Rules necessitates the issuance of a notice in Part A of Form GST DRC-01A before any order can be pronounced under Section 74 of the CGST Act. The absence of such an SCN, according to Skyline, deprives taxpayers of their fundamental right to present their case effectively.

Precedent and Reference:

To substantiate its case, Skyline draws attention to the precedent set in the Gulati Enterprises vs. Central Board of Indirect Taxes and Customs case. In this prior case with similar facts, the absence of an SCN led to the invalidation of proceedings and their subsequent re-initiation by the Revenue Department.

Observation and Judgment:

 The court overseeing this case has reached a decisive verdict. It has quashed the disputed order, asserting that the initial proceedings were fatally flawed. Consequently, any subsequent orders were deemed null and void. Given that the mandatory communication of tax, interest, and penalty details in Part A of FORM GST DRC-01A was omitted, the entire process was deemed fundamentally flawed.


 In summary, the crux of this legal dispute lies in a procedural deficiency. The order issued by the Revenue Department has been successfully challenged by Skyline Automation Industries due to its failure to adhere to the prescribed due process delineated in Rule 142(1A) of the CGST Rules.

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