Allahabad High Court
SHRI SANJAY SHERAWAT AND ANOTHERversusJOIN COMMISSIONER AND ANOTHER
- Decided
Holding
The adjudication order dated 25‑03‑2026 is set aside and the matter remanded for fresh service of notice and adjudication.
Summary
Petitioners Sanjay Sherawat and another challenged an adjudication order dated 25‑03‑2026 that imposed a penalty under section 122(2)(b) of the CGST Act, 2017. They submitted a supplementary affidavit showing that they had resigned as directors of M/s Daurli Ispat Pvt Ltd on the dates specified, with MCA documents. The court examined whether the show‑cause notice dated 05‑06‑2023 was validly served on them after their resignations and found that proper service had not occurred. Consequently, the adjudication order was held to be unsustainable. The court set aside the order and directed the revenue to serve a fresh notice within fifteen days, with the petitioners to reply within three weeks and a hearing to be fixed thereafter, concluding the matter by 31‑12‑2026.
Issues considered
- Whether the show‑cause notice under the CGST Act was validly served on petitioners who had resigned as directors.
- Whether the adjudication order imposing penalty under section 122(2)(b) of the CGST Act can stand without proper notice.
- Whether the adjudication order should be set aside and proceedings remanded for fresh adjudication.
Legislation cited
- Central Goods and Services Tax Act, 2017 — s. 122(2)(b)
Subjects
- CGST
- penalty
- show cause notice
- adjudication order
- director resignation
- service of notice
- writ petition
- tax law
Judgment
HIGH COURT OF JUDICATURE AT ALLAHABAD
WRIT TAX No. - 3563 of 2026
Shri Sanjay Sherawat And Another
.....Petitioner(s)
Versus
Join Commissioner And Another
.....Respondent(s)
Counsel for Petitioner(s) : Anil Prakash Mathur
Counsel for Respondent(s) : Dhananjay Awasthi
Court No. - 39
HON'BLE SAUMITRA DAYAL SINGH, J.
HON'BLE SWARUPAMA CHATURVEDI, J.
1. Heard Shri Anil Prakash Mathur, learned counsel for the petitioner and
Shri Dhananjay Awasthi, learned counsel for the revenue.
2. Present writ petition has been filed to assail the Adjudication Order
dated 25.03.2026 passed by respondent no. 3 creating demand of penalty
under section 122 (2)(b) of CGST Act, 2017, and the consequential
recovery.
3. Supplementary affidavit is on record. In paragraph 2 of the said
affidavit, it has been stated as below:-
"2. That the deponent above named is humbly filing the Supplementary
Affidavit in terms of Hon'ble High Court's order dated 25.08.2026 to
prove that Shri Sanjay Kumar petitioner no. 1 had resigned on
18.09.2018 as he was Director from 27.09.2018 to 18.09.2018 of M/s
Daurli Ispat Private Limited and petitioner Smt. Vinita had resigned on
08.02.2022 and she was Director from 31.12.2020 to 08.02.2022.
True copies of Ministry of Corporate Affairs showing the above details
are annexed to this Supplementary Affidavit marked as Annexure No. SA-
1 & SA-2 respectively."
4. To the extent, the fact of resignation (of the two petitioners) as
Directors of the company M/s Daurli Ispat Pvt. Ltd., is an indisputable
fact, occasioned by the recognition granted to those resignations under the
Companies Act, primarily, service of show cause notice dated 05.06.2023,
WTAX No. 3563 of 2026
2
issued after their resignation, may not amount to service of notice or
knowledge of the show cause notice on the petitioners. As to service of
individual notices on the petitioners, it also appears true that such notices
were not served on the petitioners before the impugned order came to be
passed.
5. Confronted with the above, learned counsel for the revenue states that
in such facts impugned order may be set aside qua the petitioners and the
proceedings remanded to the respondent no. 3 for fresh adjudication.
6. The present writ petition is accordingly disposed of on the following
terms :
(i) The impugned Adjudication Order dated 25.03.2026 is set aside.
(ii) Respondent may serve the show cause notice dated 05.06.2023, upon
the present petitioners, afresh along with all relied upon documents etc.
within a period of fifteen days from today.
(iii) The petitioners undertake to file their written reply to the show cause
notice within a period of three weeks therefrom.
(iv) Upon filing of such reply, appropriate date for hearing may be fixed
by respondent no. 3 with at least fifteen days advance notice.
(v) Petitioners undertake to cooperate in the proceedings and not seek any
undue and long adjournment. Thereafter the proceeding may be
concluded and appropriate fresh order may be passed as expeditiously as
possible necessarily on or before 31.12.2026.
(Swarupama Chaturvedi,J.) (Saumitra Dayal Singh,J.)
September 8, 2026
Bhanu
Digitally signed by :-
BHANU PRATAP KUSHWAHA
High Court of Judicature at Allahabad
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