Receiving a Show Cause Notice (SCN) proposing a penalty under Section 122 of the CGST Act can be alarming. This section lists numerous “specified offences” that can attract significant financial penalties, often without a direct demand for tax 

 Unlike notices for tax recovery under Sections 73 or 74, a Section 122 notice focuses squarely on penalizing a specific contravention.

Step 1: Scrutinize the SCN for Procedural Flaws The SCN is the foundation of the department’s case; if the foundation is weak, the case cannot stand 

. Before addressing the merits, check for these procedural lapses:

• Valid DIN: Does the notice have a Document Identification Number (DIN)? An SCN without a DIN can be argued as invalid
• Proper Officer: Was the notice issued by “the” proper officer with the correct jurisdiction?

• Clarity and Specificity: Are the allegations specific, or are they vague and based on assumptions? An SCN must clearly state the offence and the provision violated A vague notice denies you a proper opportunity to defend yourself.
• Limitation : Whether the notice has been issued within limitation period?

• Digital Signature :Is the notice digitally signed? An unsigned notice uploaded to the portal is not a substitute for proper authentication under Rule 26
• Proper Service: Was the notice served correctly as per Section 169? Service upon an accountant, for example, is not valid service

Step 2: Formulate a Point-by-Point Factual Rebuttal Address every allegation made in the SCN directly.

• Counter the Facts: If any fact mentioned in the SCN is incorrect, counter it with documentary evidence. Unchallenged incorrect facts can be treated as admissions
• Provide Evidence: Attach all supporting documents, such as invoices, e-way bills, ledgers, and correspondence, that substantiate your position.
• Request Documents: If the SCN relies on documents (Relied-Upon Documents or RUDs) that have not been provided to you, immediately write to the authority requesting them. State clearly that a full reply cannot be prepared without these documents

• Challenge the Jurisdiction: Argue that the penalty under Section 122 cannot be invoked without first determining the tax liability under Section 73/74 No Intent to Evade: For many offences, demonstrating a lack of fraudulent intent, wilful misstatement, or suppression of facts can be a strong defense, especially when arguing against the quantum of the penalty.
• Principle of Natural Justice: State that the SCN may be biased or show a pre-determined mindset, which violates the principles of natural justice

Step 4: Conclude and Request a Personal Hearing Summarize your arguments and reiterate that no penalty is leviable. Crucially, you must explicitly request a personal hearing. An opportunity for a hearing is a pre-requisite before an adverse order can be passed, and failing to ask for one can be a costly mistake 

1. Accepting the Premise of the Notice: The biggest mistake is immediately trying to justify your actions. The first line of defense should be to challenge the validity and applicability of the notice itself on procedural and jurisdictional grounds.
2. Submitting a Generic Denial: A simple letter denying the charges is insufficient. Your reply must be a detailed, structured document with specific factual rebuttals and legal arguments for each allegation
3. Forgetting to Request a Personal Hearing: This is a fundamental right under the GST Act. Not requesting it means you lose the valuable opportunity to explain your case in person to the adjudicating authority.
4. Ignoring Procedural Lapses: Failing to point out flaws like a missing DIN, improper service, or lack of signature in your initial reply weakens your case significantly if you need to appeal later.
5. Not Providing Supporting Evidence: Your reply is only as strong as the evidence that backs it up. Always annex clear, legible copies of all relevant documents to prove your claims.

How AMLEGALS Can Help You Respond to SCNs?