Guidelines on Demand, Adjudication and Appeal Proceedings under CGST Act · 258/04/2026-GST

Circular No. 258/04/2026-GST

F. No. CBIC-20001/2/2026-GST
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes & Customs
GST Policy Wing

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Room No. 16039, Kartavya Bhawan-01
New Delhi, Dated: 26.10.2026

To,

The Principal Chief Commissioners/ Chief Commissioners (All)
The Principal Director General/ Director General (All)

Madam/Sir,

Subject: Clarification on issues related to demand, adjudication and appeal proceedings under the CGST Act, 2017 - Reg.

Adjudication and appeals under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act,” or “the Act”), constitutes an integral part of the tax administration framework, providing a quasi-judicial mechanism to ensure due process, protection of the rights of taxpayers, and reasoned decision-making in matters relating to tax liability, input tax credit, refunds, registration, penalties and other issues.

1.2. Representations have been received highlighting the need for adjudication and appeal orders to comprehensively examine the submissions and evidence placed on record by the taxpayer, the relevant statutory provisions and judicial pronouncements. Further, instances have also come to notice where orders passed by Adjudicating and Appellate Authority are vague, non-speaking, or fail to consider the submissions of the noticee or appellant, as the case may be, resulting in avoidable litigation and remand or reversal of such orders in further appeal proceedings. Various judicial pronouncements have emphasised that a quasi-judicial authorities are required to independently apply their mind to the issues arising for determination, record clear and specific findings on each material issue, and pass a reasoned order in conformity with the principles of natural justice. A well-reasoned adjudication order not only strengthens the quality and consistency of decision-making but also facilitates effective implementation of the decision, reduces avoidable litigation and instils confidence in the adjudication and appeal process.

1.3. Accordingly, with a view to providing a uniform reference framework for officers engaged in quasi-judicial proceedings and to ensure consistency, transparency and uniformity in the implementation of provisions of law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the CGST Act, hereby issues the guidelines as detailed hereunder.

2. Pre-Show Cause Notice Intimation: Rule 142(1A) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred as “the CGST Rules”) provides that taxpayers may be intimated of the tax assessed as payable under sections 73, 74, or 74A of the CGST Act, through Part A of FORM GST DRC-01A (pre-SCN intimation), prior to issuance of a formal Show Cause Notice (hereinafter referred to as “SCN” or “notice”). Such intimation, wherever feasible, may be issued to the taxpayer, as it offers them vital opportunity to clarify their position prior to formal proceedings, thereby promoting voluntary compliance and reducing the necessity of issuing show cause notice.

Show Cause Notice

3. Under the CGST Act, a notice is issued whenever the department contemplates any action prejudicial to the assessee, such as determination of tax liability, rejection of refund claim, recovery of erroneous refund, rejection of registration application or similar proceedings. The notice specifies the alleged violations of the relevant provisions and requires the noticee to show cause why such action should not be taken thereunder. In this manner, the SCN affords an opportunity to the noticee to present their case.

3.1. The notice initiates legal proceeding against the noticee, serving as the foundational document for resolving disputes related to tax liabilities or for initiating punitive measures. It sets the framework for adjudication and demands meticulous drafting as a statutory requirement grounded in the principles of natural justice, specifically the audi alteram partem rule, which ensures that no one is condemned without being heard. The notice grants an opportunity to the noticee, to submit oral or written submissions to the Adjudicating Authority in response to the charges specified.

3.2. Further, rules 100 and 142 of the CGST Rules require issuance of a summary along with the notice or statement, electronically in FORM GST DRC-01 and FORM GST DRC-02, respectively. Thus, the said summaries along with the notice or statement, as the case may be, shall be issued in FORM GST DRC-01 and FORM GST DRC-02 electronically on the common portal in terms of the aforesaid CGST Rules, so as to ensure due compliance with the statutory provisions.

4. Structure and drafting of SCN: To ensure clarity, structure, and completeness, a well-drafted SCN should ideally comprise the following parts, though it may vary from case to case:

4.1. Brief profile and introduction of the case: The SCN should clearly identify the essential particulars of the person to whom it is issued, including the name of the taxpayer/noticee, GSTIN or Temporary ID, trade or business name (if different), current GST registration status, registered principal place of business, jurisdictional details (range, division, commissionerate), and the relevant tax period(s) covered by the proposed demand or contravention. In cases involving multiple noticees, the particulars of each must be stated separately. This section should also briefly outline the background for initiation of the proceedings such as through assessment, audit, return scrutiny, or enforcement, along with the nature of the verification, investigation, or audit concerned. This requirement is supported by various judicial pronouncements, including the Hon’ble Telangana High Court judgment in M/s Nice Enterprises v. Deputy Commissioner ST [(2024) 21 Centax 554 (Telangana)], wherein it was held that an SCN merely reproducing statutory provisions without specifying the grounds or sufficient factual particulars violates natural justice, and that the notice must furnish adequate grounds and elementary details to enable the assessee to understand the case and file an effective reply.

4.2. Factual background and examination of documents and evidences: In this part of SCN, the acts of omission and commission by the noticee, leading to the proceedings, should be precisely outlined in an objective manner. As evidences form the foundation of the SCN, they should be examined and discussed objectively to identify and highlight discrepancies, omissions, or irregularities that substantiate the alleged contraventions. The SCN may also discuss corroborative evidence where relevant, using neutral expressions such as “it appears that” to maintain fairness and objectivity, avoiding terms such as "determined" or categorical conclusions that suggest a pre-judged outcome as the notice seeks an explanation from the noticee, and is not a final determination or verdict.

4.3. Discussion and legal framework: The SCN should clearly specify the legal provisions allegedly contravened, along with a clear explanation linking each omission or commission by the noticee to the violation. Care should be taken to invoke pertinent provisions, avoiding the simultaneous inclusion of unrelated sections unless each independently applies. In cases involving multiple noticees, the SCN should clearly delineate the role and involvement of each individual, so that charges are fact-based, supported by evidence and individually attributable, thereby upholding principles of natural justice and ensuring a fair and credible adjudication process.

4.4. Statement of charges: SCN should contain a concise summary of the allegations against the noticees and clearly state the grounds on which they are required to explain why action, as per statutory provisions, should not be initiated against them. The importance of ensuring that the SCN itself contains all requisite particulars and grounds is reinforced by the settled legal position in this regard. In this context, reference is invited to the judgement of Hon’ble Supreme Court in G.R Infra Project Ltd. Vs State of Madhya Pradesh (2026) 45 Centax 331 (S.C) dated 19.08.2026, wherein, it was held that the requirements necessary to sustain the validity of an alleged notice or order must be contained therein and any deficiency in the SCN, including non-application of mind or failure to meet the requisite requirements, cannot subsequently be cured or remedied.