2022 (7) TMI 703 - HC - GST

Validity of SCN and summary SCN - case in the petition is that the show-cause notices at Annexure-2 in the respective writ petitions is in teeth of the provisions of Section 73(1) the JGST Act 2017 - non-application of mind - violation of principles of natural justice - HELD THAT - The notices under section 73(1) of the Act of 2017 at Annexure-2 in the respective writ petitions are in the standard format and neither any particulars have been struck off, nor specific contravention have been indicated to enable the petitioners to furnish a proper reply to defend themselves. The show-cause notices can therefore, be termed as vague. This Court has, in the case of M/S. NKAS SERVICES PRIVATE LIMITED. VERSUS THE STATE OF JHARKHAND, THE COMMISSIONER OF STATE TAXES, RANCHI, DEPUTY COMMISSIONER OF STATE TAXES, GODDA 2021 (10) TMI 880 - JHARKHAND HIGH COURT categorically held that summary of show cause notice in Form GST DRC-01 cannot substitute the requirement of a proper show cause notice under section 73(1) of the Act of 2017. It seems that the authorities have, after issuance of show-cause notices dated 20.08.2020, 27.008.2020 and 28.08.2020 (Annexure-2 in the respective writ petitions) and Summary of show cause notices contained in GST DRC-01 (Annexure-3 in the respective writ petitions) of the same date, proceeded to issue Summary of the Order dated 12.12.2020 and 14.12.2020 (Annexure-4 in the respective writ petitions). Respondents have also not brought on record any adjudication order. The impugned show-cause notices and Summary of the Show Cause Notices dated 20.08.2020, 27.08.2020 and 28.08.2020 (Annexure-2 3 in the respective writ petitions) and Summary of Orders contained in Form GST DRC-07 dated 12.12.2020 and 14.12.2020 (Annexure-4 in the respective writ petitions) are quashed - Petition allowed.

Summary

Issues:
1. Quashing of show-cause notices and related orders issued under JGST Act, 2017 for the tax period April 2018 to March 2019.
2. Challenge to the imposition of 100% penalty and violation of principles of natural justice in the proceedings.

Detailed Analysis:
1. The judgment involves multiple writ petitions concerning the quashing of show-cause notices and related orders issued under the Jharkhand Goods and Service Tax (JGST) Act, 2017 for the tax period April 2018 to March 2019. The petitioners challenged the validity of the notices issued by the Deputy Commissioner of State Tax, Jharkhand. The petitioners argued that the notices were vague and did not specify the contraventions they were accused of, preventing them from defending themselves adequately. They also contested the imposition of 100% penalty, claiming it was impermissible under the Act. The court noted that the notices lacked essential particulars and contraventions, rendering them vague and in violation of principles of natural justice.

2. The judgment also addressed the issue of the imposition of 100% penalty in the Summary of Orders, which was deemed contrary to the provisions of Section 73(9) of the JGST Act, 2017. The court highlighted that the Deputy Commissioner had not adhered to the statutory provisions while levying the penalty. Additionally, the court found that the proceedings suffered from a violation of natural justice and procedural irregularities. The judgment emphasized the importance of laying down the foundation of a case in the show-cause notice to enable the assessee to defend themselves adequately. The court cited legal precedents to support its stance on the necessity of proper show-cause notices and the limitations on penalty imposition.

In conclusion, the High Court of Jharkhand quashed the impugned show-cause notices, Summary of Show Cause Notices, and Summary of Orders dated 12.12.2020 and 14.12.2020 for the tax period April 2018 to March 2019. The Deputy Commissioner of State Tax, Godda was granted liberty to initiate fresh proceedings with proper show-cause notices in accordance with the law. The court's decision was based on the vagueness of the notices, the impermissible imposition of 100% penalty, and the violation of principles of natural justice and statutory provisions under the JGST Act, 2017.