Calcutta High Court Stays GST Demand: Vagueness in Show Cause Notice and Jurisdictional Validity under Section 74

In a significant legal development concerning the adjudication of Goods and Services Tax (GST) disputes, the Calcutta High Court has granted interim relief to an assessee, restraining the revenue authorities from enforcing a demand based on a contentious adjudication order. The case, Multireach Media Private Limited And Another Vs Deputy Commissioner of State Tax, highlights critical issues regarding the jurisdiction of GST authorities over pre-GST matters and the mandatory requirement for specificity in Show Cause Notices (SCN).

The High Court's intervention underscores the judiciary's stance that tax proceedings must strictly adhere to the principles of natural justice, particularly when invoking the extended period of limitation under Section 74 of the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017.

Background of the Dispute

The writ petition was filed challenging an adjudication order dated February 5, 2025. This order was passed by the revenue authorities under Section 74 of the GST enactments. The root of the controversy lay in a Show Cause Notice issued on June 14, 2024, wherein the department invoked the extended period of limitation to scrutinize the assessee's activities.

The period under dispute covered July 2017 to March 2018, a critical timeframe marking the transition from the Service Tax regime to the GST framework. The revenue authorities initiated these proceedings alleging discrepancies, specifically focusing on the transition of credit and the submission of documents.

Key Contentions of the Assessee

The legal counsel for the petitioners (the assessee) raised fundamental objections regarding the legality of the proceedings, focusing on two primary pillars: Lack of Jurisdiction and Vagueness of the Notice.

1. Jurisdictional Challenge: Service Tax vs. GST

The assessee argued that the initiation of proceedings under Section 74 of the GST Act was legally unsustainable. The core argument was that the allegations pertained to the transitional phase. The petitioners contended that GST authorities are not empowered to investigate matters strictly relating to Service Tax under the pretext of scrutinizing TRAN-1 returns.