2023 (1) TMI 1223 - HC - GST

Validity of summary SCN - Attachment of Bank Account of petitioner - input tax credit on inward supply in accordance with Section 16 of Jharkhand Goods and Services Tax Act, 2017 - HELD THAT - It transpires that a show cause notice under Section 73(1) of the JGST Act, 2017 dated 7.1.2022 (Annexure-1) for the tax period January 2019-February 2019 was issued. However, from bare perusal of Annexure-1, it appears that the same is issued in a format without striking out of irrelevant particulars, thus the same is vague and does not spell out clearly the contravention for which the petitioner is charged. It is in fact, worse than summary of show cause notice in Form GST DRC-01 of the same date. Now it is well settled that the show cause notice issued under Section 73(1) of the Act is not mere a formality. As a matter of fact, the intent of legislature for issuing a show cause notice along with DRC-01 is that the DRC-01 is a summary of show cause notice and show cause notice should be in detailed giving the facts and circumstances and the grounds for levying tax. However, by going through the impugned show cause notice dated 7.1.2022, it appears that it is in a format without striking out the irrelevant particulars. It further transpires that the respondent Deputy Commissioner, Deoghar finally issued DRC-07 on 9.2.2022 without giving any further opportunity which is certainly beyond the provisions of law - the show cause notice is in a format and is not in a strict compliance of Section 73 (1) of the JGST Act and Rule 142(1)(a) of the Rules and since the principle of natural justice has not been complied in the instant case, the ground of alternative remedy is not acceptable by this Court. For the reasons stated hereinabove the instant application is allowed and the impugned show cause notice and DRC 01; both dated 7.1.2022 and also the summary of order issued under DRC-07 dated 9.2.2022, are hereby, quashed and set aside. The matter is remitted back to the Deputy Commissioner, State Tax Deoghar, Jharkhand to pass a fresh order after following due procedure of law from the stage of issuing fresh show cause notice strictly in accordance with law - Application allowed.

Summary

Issues:
Challenge to show cause notice under Section 73 of Jharkhand Goods and Services Tax Act, 2017; Compliance with procedural requirements; Invocation of writ jurisdiction despite the availability of alternative remedy under Section 107 of the JGST Act.

Analysis:
1. The petitioner sought relief by challenging the show cause notice, summary of show cause notice, and order issued under the Jharkhand Goods and Services Tax Act, 2017. The petitioner contended that the show cause notice lacked specificity and failed to clearly outline the contravention charged against them. The petitioner argued that the notice did not comply with the decision of the court in a similar case, emphasizing the importance of clear charges for the accused to defend themselves adequately.

2. The revenue, represented by counsel, opposed the petitioner's plea, asserting that the petitioner had an alternative remedy under Section 107 of the JGST Act and should have pursued that route instead of filing a writ application directly. The revenue maintained that the show cause notice was issued due to violations under Section 16(4) of the JGST Act for a specific tax period. The revenue highlighted the lack of response from the petitioner to previous notices and the subsequent issuance of orders in accordance with the law.

3. Upon examination of the documents and arguments presented, the court found that the show cause notice issued was deficient as it did not strike out irrelevant particulars, rendering it vague and failing to specify the contravention clearly. The court also noted that the subsequent order issued without an adjudication order was against the principles established in prior court decisions. The court emphasized the importance of following due process and the principles of natural justice in such proceedings.

4. The court referenced a previous judgment to emphasize that a show cause notice must clearly state the charges to afford the accused a reasonable opportunity to defend themselves. It was highlighted that acts of fraud or suppression must be specifically pleaded to enable the noticee to respond effectively. The court reiterated that the notice should contain specific details to allow the accused to explain and defend against the allegations.

5. Consequently, the court ruled in favor of the petitioner, quashing the impugned show cause notice, summary of show cause notice, and order issued. The matter was remitted back to the Deputy Commissioner to pass a fresh order following the due procedure of law. The court clarified that its decision was based on procedural non-compliance and the violation of principles of natural justice, without delving into the merits of the case.

This detailed analysis of the judgment highlights the issues raised, the arguments presented by both parties, and the court's reasoning leading to its decision to provide a comprehensive understanding of the legal proceedings.