Why tax litigation is different
Tax matters are not ordinary civil disputes. They run on statutory limitation periods, prescribed forms and a layered hierarchy of authorities — assessing officer, appellate authority, tribunal, High Court and Supreme Court. Missing a date or filing under the wrong section can lose substantive rights even before the merits are heard. Whether you are an individual receiving a section 148 notice in Allahabad or a small business facing a GST audit in Prayagraj, the early moves shape every later outcome.
This guide walks through how the two main Indian tax regimes — direct tax under the Income Tax Act, 1961, and indirect tax under the CGST Act, 2017 (read with the Uttar Pradesh GST Act, 2017) — actually function in practice for taxpayers in UP.
Part 1 — Income Tax: from notice to appeal
The common notices and what they mean
- Section 142(1) — Inquiry before assessment. The Assessing Officer (AO) calls for documents, books or a return. A non-response invites best-judgement assessment under section 144.
- Section 143(1) — Intimation. A computer-generated summary of arithmetical and prima facie adjustments. Errors can be corrected by filing a rectification request under section 154 within four years.
- Section 143(2) — Scrutiny. Marks the start of detailed scrutiny. Must be issued within three months from the end of the financial year in which the return was filed.
- Section 148 — Reassessment. Used when income is alleged to have escaped assessment. After the 2021 amendments, the AO must first issue a section 148A notice, give an opportunity to respond, and pass a 148A(d) order before reopening.
- Section 156 — Demand notice. Issued after an assessment order. Triggers a 30-day window to pay or seek a stay.
- Section 245 — Refund adjustment intimation. The department proposes adjusting a refund against earlier demand. Silence is treated as consent.
- Section 263 / 264 — Revisionary powers. The Commissioner may revise an order that is erroneous and prejudicial to revenue (263) or revise on the taxpayer’s application (264).
- Section 270A / 271 — Penalty. Initiated alongside assessment, typically for under-reported or mis-reported income.
How a scrutiny actually unfolds
After a section 143(2) notice, the AO issues a series of section 142(1) questionnaires through the faceless assessment portal. Each requires written replies and uploaded evidence within a stated window. The assessment is now substantially digital under the Faceless Assessment Scheme, with limited personal hearings via video conferencing on request. A draft assessment order may be issued before the final order if a variation is proposed — this is the taxpayer’s last chance to file objections before the addition is sealed.
The assessment must be completed within twelve months from the end of the assessment year (subject to specific extensions). A delay can be challenged as barred by limitation.
First appeal — CIT(A) and the Faceless Appeal Scheme
An appeal against an assessment order lies before the Commissioner of Income Tax (Appeals) under section 246A, in Form 35, within 30 days of service of the assessment order. The grounds of appeal must be specific. Most CIT(A) appeals are now routed through the Faceless Appeal Scheme, with submissions and hearings online. Key choices at this stage:
- Whether to seek a stay of demand — typically by depositing 20% of the disputed amount, or arguing for a lower deposit on the strength of a prima facie case.
- Whether to raise additional grounds — permissible if facts are on record and the issue is legal.
- Whether to file a cross-appeal if the order is partly favourable.
Second appeal — the Income Tax Appellate Tribunal (ITAT)
An order of the CIT(A) is appealable to the ITAT under section 253, within 60 days, in Form 36. The ITAT is the final fact-finding authority, and its findings on facts are usually binding unless perverse. For taxpayers in Allahabad and the wider eastern UP region, appeals are heard before the Allahabad Bench of the ITAT.
Strong second-appeal practice combines a tight paper book, focused written submissions and clear citation of binding precedent — particularly judgments of the Supreme Court, the Allahabad High Court and the jurisdictional ITAT bench.
Beyond the Tribunal — High Court & Supreme Court
An order of the ITAT can be challenged before the Allahabad High Court under section 260A on a substantial question of law within 120 days. The Court does not re-appreciate evidence. A further appeal lies to the Supreme Court under section 261, with certificate or special leave.
When a writ petition makes sense
Most tax disputes must follow the statutory ladder. But a writ petition under Article 226 before the Allahabad High Court is the right remedy when:
- The notice itself is without jurisdiction (e.g. a section 148 notice issued after the limitation period, or without the section 148A procedure being followed).
- An assessment order is passed in clear violation of natural justice — no opportunity, no draft order, or a date forced impossibly close.
- A coercive recovery action is initiated despite a stay being granted or while a stay application is pending.
Search, survey & seizure
Sections 132 (search), 132A (requisition) and 133A (survey) carry their own procedural protections. A search must be authorised in writing on recorded satisfaction; statements recorded under section 132(4) carry evidentiary weight but can be retracted with reasons. After a search, block assessments under sections 153A or 153C apply, with their own limitation rules. Coordinated legal advice from the first day of the search keeps statements, panchnamas and seized records on a defensible footing.
Part 2 — GST: assessment, audit and appeals
How GST disputes start
Most GST disputes begin with one of the following:
- Form GST ASMT-10 — Scrutiny notice. Issued where the proper officer notices discrepancies in returns. A reply is filed in ASMT-11.
- Form GST DRC-01A — Pre-show-cause intimation. Communicates a proposed liability and offers the taxpayer a chance to pay or contest before formal proceedings.
- Form GST DRC-01 — Show Cause Notice (SCN). The formal notice initiating demand and adjudication under section 73 (non-fraud cases) or section 74 (cases involving fraud, wilful misstatement or suppression).
- Form GST ADT-01 — Audit notice. Commencing a departmental audit under section 65.
- Form GST REG-17 — Show cause for cancellation of registration.
- Block of input tax credit under Rule 86A — the credit ledger is frozen on the proper officer’s satisfaction; one of the most common litigated GST issues in 2024–25.
The big distinction: section 73 vs section 74
Under section 73 (no fraud) the demand period is three years from the due date of the annual return, the penalty is capped at 10% or ₹ 10,000, and a voluntary payment before SCN attracts no penalty. Under section 74 (fraud / suppression) the demand period extends to five years and the penalty can be 100% of the tax. Whether the department invokes 73 or 74 changes the financial exposure dramatically — classification at the reply stage is therefore critical.
Adjudication & first appeal
The reply to a DRC-01 is filed in DRC-06, followed by a personal hearing. The adjudication order is uploaded as DRC-07. An appeal lies to the Appellate Authority under section 107 within 3 months, in Form GST APL-01, with a mandatory pre-deposit of 10% of the disputed tax (subject to a statutory cap). A condonable delay of one further month is available on sufficient cause.
The GST Appellate Tribunal (GSTAT)
The GST Appellate Tribunal — long awaited — is now functional, with State Benches notified across India. An appeal to the Tribunal under section 112 lies within 3 months of the first appellate order, with an additional pre-deposit. Until the relevant State Bench takes up a matter, the High Court continues to entertain writs where no alternative remedy is available.
Writ remedies in GST
Writs before the Allahabad High Court are common in GST matters where:
- An order is passed without granting a personal hearing despite a specific request.
- The Tribunal is unavailable and the appeal limitation is about to expire.
- A Rule 86A block of credit is challenged for being beyond the prescribed grounds.
- Cancellation of registration is ordered without a reasoned SCN, or based on inspection without findings.
- Bank accounts are provisionally attached under section 83 without proper material.
Refund disputes
Refund claims — for excess balance in the cash ledger, inverted duty structure, exports or zero-rated supplies — follow their own timeline. The claim is filed in Form RFD-01, an acknowledgement is issued in RFD-02, deficiencies are raised in RFD-03, and a final order in RFD-06 (or rejection in RFD-08). Delays beyond the statutory 60 days attract interest under section 56.
Part 3 — A practical roadmap
Step 1: triage the notice
The first 48 hours are decisive. Identify the section invoked, the limitation period, the documents asked for and the deadline. Most notices give a 7–30 day window. A request for adjournment, filed in writing on the portal with reasons, is almost always granted once.
Step 2: stabilise the record
Pull together the return, computation, books, GSTR-1 / GSTR-3B reconciliations, Form 26AS / AIS, bank statements, ITC ledgers, contracts and prior correspondence. Identify gaps and address them in the reply rather than at the appeal stage, where new evidence may not be admitted.
Step 3: file a measured reply, not a defensive one
A good reply is structured: facts, statutory provisions, factual contentions, legal contentions, prayer. It anchors the case in the assessment record so that later appellate authorities can see the position clearly.
Step 4: protect against recovery
Where a demand is raised, an application for stay should be filed at the right forum — AO under instruction, CIT(A) under section 220(6), or the Tribunal. In GST, a deposit of the pre-deposit amount with the appeal itself operates as a deemed stay on the balance.
Step 5: pursue the appeal on merits
Compile a clean paper book, identify the substantial questions for the appellate forum, and brief on the strength of judicial precedent. The Allahabad High Court and the Allahabad ITAT bench have a deep body of case law on faceless assessments, section 148 reopening and GST procedural relief — a focused brief that uses this case law is far more persuasive than a generalised one.
Timelines you cannot afford to miss
- Reply to section 142(1) — usually 15 days, extendable on request.
- Appeal to CIT(A) — 30 days from receipt of order.
- Appeal to ITAT — 60 days from the CIT(A) order.
- Appeal to High Court under section 260A — 120 days.
- Reply to GST SCN — usually 30 days from issuance (one adjournment as of right).
- Appeal to GST Appellate Authority — 3 months, condonable up to 1 month.
- Appeal to GSTAT — 3 months from the first appellate order.
- Refund claim — 2 years from the relevant date under section 54 of the CGST Act.
Documents to keep ready
Whether it is an income tax or a GST matter, the following almost always come up:
- All notices, intimations and orders received.
- Income tax returns with computation and audit reports.
- Form 26AS and the Annual Information Statement (AIS).
- GSTR-1, GSTR-3B, GSTR-9 and reconciliation statements (GSTR-9C where applicable).
- Books of accounts, ledgers and trial balance for the period.
- Bank statements, sample invoices and major contracts.
- Prior assessment / appellate orders for the same taxpayer or issue.
How Krishna Legal supports tax matters in UP
Krishna Legal advises and represents taxpayers across the full direct-tax and indirect-tax cycle — reply to notices, faceless assessment and faceless appeal proceedings, CIT(A) and ITAT appearances, GST adjudication and first appeals, GSTAT briefing, and writ petitions before the Allahabad High Court. For clients facing time-sensitive notices, the first consultation focuses on the limitation calendar, the precise statutory section invoked and the next filing — not generic advice.
