2023 (6) TMI 832 - HC - GST

Violation of principles of natural justice - non-service of SCN - detailed order in terms of Section 73 of the JGST Act not provided to petitioner - HELD THAT - It is crystal clear that no show cause notice in terms of Section 73 (1) of the JGST Act, 2017 has been served by the Respondents upon the Petitioner towards imposition of the tax, interest and penalty under the JGST Act amounting to Rs. 8,04,134/- for the concerned period. The reliance of the Respondents on the alleged Summary show cause in Form GST DRC-01, dated 20.12.2018, is also of not much avail. The contents of the said Summary show cause in Form GST DRC-01, dated 20.12.2018, does not provide the specific alleged violations by the Petitioner and also does not specifically give the opportunity to the Petitioner to rebut the allegations of the Respondent Department. Thus, in essence, the said Form GST DRC-01 dated 20.12.2018, cannot be considered as an opportunity provided by the Respondent to the Petitioner before passing of the Impugned Summary Adjudication order in Form GST DRC 07. Similar issue was adjudicated by a Co-ordinate Bench of this Court in the case of Nkas Services Private Limited v. State of Jharkhand and Others 2021 (10) TMI 880 - JHARKHAND HIGH COURT , wherein this Court has held A summary of show-cause notice as issued in Form GST DRC-01 in terms of Rule 142(1) of the JGST Rules, 2017 (Annexure-2 impugned herein) cannot substitute the requirement of a proper show-cause notice. The Appellate authority should have decided the case on merit and should have given its finding on the grounds of Appeal that DRC-07 has been issued without issuing any no show cause notice in terms of Section 73 (1) of the JGST Act, 2017 and also without any adjudication order. The Summary Order in Form GST DRC-07, dated 19.01.2019 bearing reference number ZA200119000232J, issued by the Respondent No. 4 whereby tax, interest and penalty under the JGST Act amounting to Rs. 8,04,134/- has been imposed on the Petitioner, is hereby, quashed and set aside - Application allowed.

Summary

Issues Involved:
The issues involved in the judgment are the challenge to a Summary Order in form GST DRC-07, the Appellate Order, and a recovery notice issued under Section 79 of the Jharkhand Goods and Service Act.

Challenge to Summary Order in form GST DRC-07:
The Petitioner challenged the Summary Order dated 19.01.2019, imposing tax, interest, and penalty under the JGST Act amounting to Rs. 8,04,134. The Petitioner contended that the order was passed without a show cause notice as required under Section 73 (1) of the JGST Act, which mandates issuing a detailed show-cause notice before imposing tax, interest, or penalty. The Petitioner argued that the absence of a show cause notice rendered the Summary Order liable to be set aside, along with the Appellate Order that failed to consider this aspect.

Disputed Show Cause Notice and Violation of JGST Rules:
The Petitioner disputed receiving Form GST DRC-01 and emphasized the lack of evidence from the Respondents regarding its service. Rule 142 of the JGST Rules requires serving a detailed show cause notice along with DRC-01, which was not done in this case. The Respondents' failure to provide the show cause notice despite the Petitioner's request raised doubts on the genuineness of the documents presented. The absence of a detailed adjudication order, as required by Section 73 (9) of the JGST Act, was admitted by the Respondents, further indicating a violation of the Act's provisions.

Court's Decision and Directions:
The Court found that no show cause notice was served as per Section 73 (1) of the JGST Act, rendering the reliance on the Summary show cause notice in Form GST DRC-01 insufficient. Additionally, the absence of a detailed adjudication order meant the Petitioner was not liable to pay any tax, interest, or penalty based solely on Form DRC-07. The Appellate authority's failure to consider the grounds raised by the Petitioner and dismiss the appeal without deciding on merit was also highlighted. Consequently, the Summary Order, the Appellate Order, and the recovery notice were quashed and set aside. The Respondent department was given the option to issue a fresh show cause notice and proceed in compliance with the JGST Act and its Rules.

Conclusion:
The judgment allowed the writ application, quashing the Summary Order, the Appellate Order, and the recovery notice. It emphasized the importance of following procedural requirements under the JGST Act and directed the Respondent department to adhere to the legal provisions in any future actions related to the case.