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2023 (4) TMI 700 - HC - GSTCancellation of GST registration of petitioner - Alleged wrongful claim of ITC and wrongful distribution of ITC benefit - Opportunity of hearing provided to the petitioner - violation of principles of natural justice - HELD THAT - It is beyond cavil that a summary of a show cause notice cannot be a substitute of a proper show cause notice and would entail violation of principles of natural justice. In the absence of clear charges upon which the person so alleged is required to answer, proper opportunity to defend itself stands denied. It is also apparent from the materials on record that contrary to the requirement of Section 75(4) and (5) of the Act and the ratio rendered on the very subject by this Court in the case of M/s Godavari Commodities Ltd. 2022 (4) TMI 1026 - JHARKHAND HIGH COURT , no opportunity of hearing was granted to the petitioner before passing an order which is adverse to him - It also appears that the relied upon documents which forms the basis of passing of the impugned order, have not been supplied to the petitioners. Let it be made clear that that writ petitions have been decided only on the ground of violation of principles of natural justice and failure to follow the procedure prescribed under the Act - petition allowed.
Issues Involved:
1. Validity of Show Cause Notices under Section 74(1) of the JGST Act, 2017. 2. Violation of Principles of Natural Justice. 3. Legitimacy of Parallel Proceedings by Different Authorities. 4. Adequacy of Adjudication Orders and Supply of Relied Upon Documents. Summary: 1. Validity of Show Cause Notices: The petitioners contended that no proper show cause notice under Section 74(1) of the JGST Act, 2017, was issued by the Respondent-Authorities. They argued that the issuance of a summary show cause notice cannot substitute the requirement of a proper show cause notice. The Court concurred, emphasizing that the impugned notices did not fulfill the ingredients of a proper show cause notice, thereby violating the principles of natural justice. The Court cited its previous decision in NKas Services Pvt. Ltd. v. State of Jharkhand, which held that a proper show cause notice must clearly state the charges and allegations to allow the noticee to defend themselves effectively. 2. Violation of Principles of Natural Justice: The petitioners alleged that they were not granted adequate opportunity to present their case, and no date of hearing was fixed before the impugned adjudication orders were passed. They also contended that the relied upon documents were not supplied to them. The Court found that no opportunity of hearing was granted to the petitioners, contrary to Section 75(4) and (5) of the Act, and the relied upon documents were not provided. The Court referenced its decision in M/s Godavari Commodities Ltd. v. State of Jharkhand, which emphasized the necessity of granting an opportunity of hearing and supplying relied upon documents to the noticee. 3. Legitimacy of Parallel Proceedings: The petitioners argued that two parallel proceedings or investigations for the same transaction by different authorities cannot be continued. The Court did not specifically address this issue in the judgment, focusing instead on the procedural lapses and violation of natural justice by the State Tax authorities. 4. Adequacy of Adjudication Orders and Supply of Relied Upon Documents: The Court noted that in W.P.(T) No. 1594 of 2019, the adjudication order was passed without proper notice and hearing. The Court emphasized that a summary of a show cause notice cannot replace a proper show cause notice, and the absence of clear charges denies the noticee a proper opportunity to defend themselves. Conclusion: The Court quashed the impugned summary of show cause notices and orders in GST DRC-01 and GST DRC-07 for all the petitioners, citing violations of natural justice and procedural lapses. The Court granted liberty to the competent authority to initiate fresh proceedings by issuing proper show cause notices in accordance with the law. The judgment was based solely on procedural grounds, without commenting on the merits of the case. The Court also clarified that the quashing of the notices and orders by the State Tax authorities would not impede the respondent DDGI from proceeding against the petitioners in the pending proceedings.
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