2022 (12) TMI 590 - HC - GST

Input Tax Credit (ITC) - validity of demand raised before issuance of show cause notice (SCN) - summary of notice in Form DRC-01 - mismatch of the GST payable on inward supplies as recorded in the Form GSTR 2A with the GSTR 3B returns - goods in transit as on 31st March (end of Financial year) - It is submitted that, in 2018-19, the company availed less credit of GST than what was available to it in terms of the GSTR 2A returns. Whereas in 2019-20, owing to the delayed availment of credit on supplies effected in the previous financial year, the company took input tax credit in excess of the GST paid on the inward supplies effected in 2019-20. HELD THAT - the show cause notice in terms of Rule-142(1) of the JGST Rules has not been served to the petitioner before issuance of summary of notice in Form DRC-01. - Accordingly, the impugned summary of show cause notice dated 03.11.2020 issued in Form-DRC-01(Annexure-1) is quashed and set aside. - Revenue are at liberty to initiate fresh proceeding from the stage of issuance of Show-Cause Notice in terms of Section 73 read with Rule 142(1) of the JGST Rules.

Issues:
1. Quashing of impugned order and notice of demand under JGST Act.
2. Allegation of excess input tax credit by the petitioner.
3. Compliance with procedural requirements under JGST Act.
4. Lack of proper show cause notice and personal hearing.

Analysis:
1. The petitioner sought to quash the impugned order and notice of demand issued under the Jharkhand Goods and Service Tax (JGST) Act, alleging non-compliance with due provisions. The petitioner, engaged in mining and works contracts, claimed input tax credit on inward supplies in accordance with Section 16 of the CGST Act and JGST Act. Discrepancies arose due to delayed invoicing and receipt of goods, leading to a mismatch in GST credits claimed and paid. The jurisdictional State GST authority issued a Summary of Show Cause Notice alleging excess input tax credit availed by the petitioner, which was disputed by the petitioner.

2. The petitioner contended that the Summary of Show Cause Notice lacked a proper Show Cause Notice under Section 73(1) of the JGST Act, depriving them of the right to a full reconciliation of returns. The petitioner emphasized the necessity of a proper show cause notice and personal hearing, citing previous judgments highlighting the importance of procedural fairness in tax matters. The respondent defended the initiation of proceedings based on a notice of intimation served to the petitioner, but acknowledged the absence of a detailed show cause notice.

3. The High Court, after considering the arguments and documents on record, found that the show cause notice under Rule 142(1) of the JGST Rules had not been served before issuing the Summary of Show Cause Notice. The Court noted that previous perceptions regarding summary notices were not in line with the current legal position, emphasizing the requirement of a detailed show cause notice as per Section 73 of the Act. The Court also highlighted the mandatory nature of personal hearing, as established in previous judgments.

4. Consequently, the Court held that the absence of a proper show cause notice and personal hearing constituted a violation of natural justice and the prescribed legal procedures. The impugned summary of show cause notice and related orders were quashed and set aside. The Court clarified that the decision did not delve into the merits of the case, allowing the respondents to initiate fresh proceedings from the issuance of a proper show cause notice in compliance with Section 73 and Rule 142(1) of the JGST Rules. The writ application was allowed based on the procedural irregularities identified in the case.

← Previous Next →