2023 (6) TMI 362 - HC - GST

Validity of issuance of show cause notice on Form GST DRC-01 in place of Form GST DRC-01A - Levy of penalty u/s 142(1A), 142 (3) (a) and (d) of CGST Act - case of petitioner is that present notice has been issued prematurely, before any regular show cause notice may have been issued in any adjudication proceedings - opportunity of hearing denied - violation of principles of natural justice - HELD THAT - Clearly, the petitioner does not admit any fact allegations being levelled against him. Therefore, the requirement of preliminary notice has largely been rendered formal. If issuance of such notice would not have served any benefit to the assessee, it would be futile on the part of the writ-Court to enforce on the revenue authorities fulfilment of that condition, in the present case, at this stage. No real prejudice has been caused to the petitioner. There is a material fact distinction in Agrometal Vendibles Private Limited 2022 (4) TMI 823 - GUJARAT HIGH COURT and the present case. There, not only the first notice had been issued on Form GST DRC-01 but the authority chose to create a firm demand of tax and penalty. That has been duly extracted in the order of the Gujarat High Court. There exists no doubt as to its absence in the present case. No such firm demand has been created. Recitals contained in the notice clearly indicate, at present, the petitioner has been required to show cause, why such demand may not be created. Mere mention of wrong form number, without anything more, may not be fatal to the proceedings. Thus, no good ground is made out to offer any interference on merits, in exercise of extra-ordinary jurisdiction under Article 226 of the Constitution of India. Thus, prayer made in the writ petition is declined .

Summary

Issues involved:
The issues involved in the judgment are premature issuance of demand cum notice to show cause, discrepancy in the form used for the notice, failure to upload the notice on the GST portal, and failure to serve the notice through electronic means.

Premature Issuance of Notice:
The petitioner challenged a demand cum notice to show cause issued prematurely before any regular show cause notice in adjudication proceedings. The petitioner argued that the notice was issued on Form GST DRC-01 instead of Form GST DRC-01A, denying the opportunity to pay the alleged defaulted amount on a self-assessed basis. The petitioner relied on a Gujarat High Court decision to support the argument.

Discrepancy in Form Description:
The revenue authorities defended the notice, stating that the petitioner disputed the entire tax liability, making adjudication proceedings necessary. The revenue authorities assured the court that any errors would be rectified promptly, and all necessary information would be uploaded on the GST portal and communicated to the petitioner electronically.

Technical Objection vs. Real Prejudice:
The court considered the objection regarding the form discrepancy to be hyper-technical and not causing real prejudice to the petitioner. The petitioner's dispute of the penalty amount proposed rendered the requirement of a preliminary notice largely formal. The court distinguished the present case from the Gujarat High Court decision based on the absence of a firm demand of tax and penalty in the current case.

Decision and Direction:
The court declined to interfere on merits under Article 226 of the Constitution of India, as no good ground was established for interference. However, to ensure justice, the petitioner was granted one month to file a reply to the show cause notice. The revenue authorities were directed to upload all necessary documents on the GST portal and communicate with the petitioner electronically within 48 hours, maintaining proper communication channels and conducting the proceedings in accordance with the law.