The Tribunal held that the show cause notice was for non-existence of the firm, not for wrong availment of ITC, and imposing a cash deposit condition beyond the scope of the SCN violates Section 75(7) and the provisos to Section 107(11).
The GSTAT Lucknow Bench has allowed an appeal by a chemicals and leather fittings dealer, holding that the First Appellate Authority exceeded its jurisdiction by imposing a condition requiring deposit of Rs. 26,26,000 in cash within seven days for restoring GST registration, coupled with an automatic-void clause [M/s H.I. International v. Himanshu Verma, JC (IT) & Ors].
The Division Bench of Narendra Kumar (Judicial Member) and Alok Chopra (Technical Member) held that the SCN was issued solely for non-existence of the firm on site verification under Rule 21(a), not for wrong availment of ITC — yet the OIO was passed on the entirely different ground of wrongful ITC availment, in clear violation of Section 75(7).
The Tribunal observed that ITC determination is a distinct adjudicatory proceeding under Sections 73 and 74, requiring Form DRC-01 notice and a specific opportunity to contest. None of these safeguards were followed. The second proviso to Section 107(11) expressly prohibits an order requiring payment of tax or ITC without notice to show cause — no such notice was given.
The Tribunal set aside both orders, revoked the cancellation of registration, and granted liberty to the respondent to initiate de novo proceedings through the proper statutory mechanism to protect revenue.
2026-juristway.com-2940-GSTAT(Lucknow)-GST | GSTAT, Lucknow | APL/201/LCK/2026 | 08.10.2026
