CGST SCN Based on Income-Tax Search Valid if Independently Scrutinised

Case Details: J M Jain vs. Union of India [2025] 180 taxmann.com 864 (Delhi)

Judiciary and Counsel Details

Prathiba M. Singh & Shail Jain, JJ.
J.K. Mittal, Ms Vandana Mittal, Mukesh Choudhary, Mohit & Lalitendra, Advs. for the Petitioner.
Brijesh Yadav, Avinash Shukla, Priyatam Bhardwaj, Shagan Vaswani, Advs., Dipak Raj & Anurag Ojha, SSC for the Respondent.

Facts of the Case

The petitioner submitted that the Income-tax Department conducted a search at its premises for the relevant period and recovered computer servers, audit books, statutory records, digital devices, and employee communications, followed by recording of statements. It was stated that these materials were later shared with the GST authorities, who thereafter issued a show cause notice (SCN) alleging concealed commission income and GST evasion for FY 2019-20 to 2021-22. It was contended that the SCN was vague and baseless, relied solely on income-tax material without independent GST inquiry. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that documents and statements obtained during an income-tax search may be utilised by the GST authorities for scrutiny, but any presumption arising therefrom under Section 292C of the Income-tax Act, 1961 is rebuttable and cannot, by itself, form the basis of a final assessment under Section 74 of the CGST Act. The Court observed that the SCN in question was accompanied by relied-upon documents, business analysis, special audit findings, statement summaries, and GST computation, and therefore could not be considered vague or lacking particulars. The Court concluded that the challenge was premature, as the petitioner must first reply to the SCN and participate in adjudication, where all objections may be raised.

List of Cases Referred to

Goa University v. Joint Commissioner of Central GST [2025] 173 taxmann.com 562/96 GSTL 513 (Bombay) (para 15)
Commissioner of Customs (Imports), Chennai v. Flemingo (DFS) (P.) Ltd. 2010 (251) E.L.T. 348 (Mad.) (para 15)
Union of India v. Garware Nylons Ltd. 1996 (87) E.L.T. 12 ( SC) (para 15)
Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate [2025] 177 taxmann.com 478/111 GST 400/101 GSTL 289 (SC) (para 15)
Surjeet Singh Chhabra v. Union of India 1996 taxmann.com 71/1997 (89) E.L.T. 646 (SC) (para 21)
P. R. Metrani v. CIT [2006] 157 Taxman 325 (SC) (para 52)
CIT v. Ashok Kumar Poddar [2023] 156 taxmann.com 285/296 Taxman 171 (Calcutta) (para 54)
Pepsi Foods (P.) Ltd. v. Asstt. CIT [2014] 52 taxmann.com 220/[2015] 231 Taxman 58 (Delhi) (para 55)
Pr. CIT v. Himanshu Chandulal Patel [2019] 109 taxmann.com 202/267 Taxman 305 (Gujarat) (para 56)
CIT v. Kishan Lal (HUF) [2003] 133 Taxman 102/[2002] 258 ITR 359 (Delhi) (para 68)
Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) (para 68)
Neela Productions v. CIT [1997] 223 ITR 504 (Kerala) (para 69)
KMG Wires (P.) Ltd. v. National Faceless Assessment Centre [2025] 179 taxmann.com 565 (Bombay) (para 71)
Christian Louboutin SAS v. Shoe Boutique [CS (COMM) No. 583 of 2025] (para 72)
J M Jain v. Union of India [W. P. (C) No. 1206 of 2025] (para 75)
J M Jain v. Union of India [SLP (C) Nos. 8544 of 2025, dated 7-4-2025] (para 76).