Case Details: J.M. Jain vs. Union of India (2025) 37 Centax 59 (Del.)
Judiciary and Counsel Details
- Prathiba M. Singh & Shail Jain, JJ.
- S/Shri J.K. Mittal, Ms Vandana Mittal, Mukesh Choudhary, Lalitendra & Mohit, Advocates, for the Petitioner.
- S/Shri Anurag Ojha, SSC with Brijesh Yadav, Dipak Raj, Avinash Shukla, Priyatam Bhardwaj & Shagan Vaswani, Advocates, for the Respondent.
Facts of the Case
The petitioner received a show cause notice (SCN) alleging GST evasion, which was issued based on findings shared by the Income-tax Department following search operations. The SCN annexed relied-upon documents (RUDs), detailed business analysis, special audit reports, statements, and computed GST, including case law citations, and alleged concealed commission. The petitioner contended that the SCN was vague, baseless, relied solely on Income-tax findings without independent GST evidence, omitted digital evidence from the RUD list, and cited non-existent judgments. The GST authorities submitted that independent scrutiny had been carried out, one incorrect citation was accepted, and all relevant material was provided within the knowledge of the petitioner. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that the SCN was not bereft of particulars and was not vague, as RUDs, seized material, and detailed computations were supplied and accessible to the petitioner. While physical verification of case law reports showed that some citations matched and a few did not correspond exactly to the subject, the SCN contained sufficient information to enable a proper response. The Court emphasised that departments must exercise utmost caution against Artificial Intelligence hallucinations and verify citations before issuing SCNs or finalising assessments. It was further held that challenging the SCN at this stage was premature, and the petitioner must file a reply during personal hearing, raising all objections in accordance with Section 74 read with Sections 144 and 160 of the CGST Act/Delhi GST Act and provisions of the Income-tax Act, 1961.
List of Cases Cited
- Armour Security (India) Ltd. v. Commissioner — (2025) 33 Centax 222 (S.C.) = 2025 (101) G.S.T.L. 289 (S.C.) — Referred [Paras 15, 64]
- Christian Louboutin SAS v. Shoe Boutique — CS (COMM) No. 583 of 2025 by Delhi High Court — Referred [Para 72]
- Commissioner of Income Tax v. Ashok Kumar Poddar — 2023 SCC OnLine Cal 6527 — Referred [Para 54]
- Commissioner of Income Tax v. Kishan Lal (HUF) — (2002) 258 ITR 359 (Del) — Referred [Paras 68, 69]
- Commissioner v. Flemingo (DFS) (P.) Ltd. — 2010 (251) E.L.T. 348 (Mad.) — Referred [Para 15]
- Goa University v. Joint Commissioner — (2025) 29 Centax 281 (Bom.) = 2025 (96) G.S.T.L. 513 (Bom.) — Referred [Para 15]
- J.M. Jain v. Union of India — S.L.P. (C) No. 8544 of 2025, decided on 7-4-2025 by Supreme Court — Referred [Para 76]
- J.M. Jain v. Union of India — W.P. (C) No. 1206 of 2025, decided on 30-1-2025 by Delhi High Court — Referred [Paras 75, 46]
- KMG Wires (P.) Ltd. v. National Faceless Assessment Centre — 2025:BHC-OS:19789-DB — Referred [Para 71]
- Neela Productions v. Commissioner of Income Tax — (1997) 223 ITR 506 (SC) — Referred [Para 69]
- P.R. Metrani v. Commissioner of Income Tax — (2007) 1 SSC 789 — Referred [Paras 52, 53, 54]
- Pepsi Foods (P.) Ltd. v. Assistant Commissioner of Income Tax — 2014 SCC OnLine Del 4029 — Referred [Paras 55, 56]
- Principal Commissioner of Income Tax v. Himanshu Chandulal Patel — 2019 SCC OnLine Guj 2899 — Referred [Para 56]
- Pullangode Rubber Produce Co. Ltd. v. State of Kerala — (1973) 91 ITR 18 (SC) — Referred [Paras 68, 69]
- Surjeet Singh Chhabra v. Union of India — 1997 (89) E.L.T. 646 (S.C.) — Referred [Paras 21, 68, 69]
- Union of India v. Garware Nylons Ltd. — 1996 (87) E.L.T. 12 (S.C.) — Referred [Para 15]
