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2023 (10) TMI 1246 - HC - GSTValidity of Show Cause Notice - SCN issued straight away, without issuing a prior intimation under Rule 142(1A) of CGST Rules, 2017 - Violation of principles of natural justice - Applicability of Rule as amended - HELD THAT - Prior to the amendment, Rule 142(1A) of CGST Rules, 2017 reads that the proper officer shall, before service of notice on the person chargeable with tax, interest and penalty under Section 73(1) or 74(1) of CGST/APGST Act, communicate him the details of tax, interest and penalty as ascertained by the said officer in FORM GST DRC-01. The employment of the word shall in Rule 142(1A) would indicate that the officer shall necessarily follow the procedure prescribed under Rule 142(1A) of the Act, meaning thereby, an intimation of tax shall be issued in terms of Rule 142(1A) at first and if there is no response from the tax payer, then he can issue a show cause notice under Section 74(1) of CGST/APGST Act - Rule 142(1A) of CGST Rules,2017 has been amended as by virtue of notification No. 79/2020-CT dt.15.10.2020 and by virtue of the said amendment, the words proper officer shall has been substituted with the words proper officer may as appearing in Rule 142(1A). Thus, post amendment, the issuance of intimation under Rule 142(1A) is not mandatory, but discretionary on the part of the assessing authority. It is a trite law that whenever any ambiguity arises with regard to any provision, the benefit must go to the tax payer. In the instant case, since admittedly the tax period related to 01.07.2017 to 31.03.2021 which covers the pre and post amended period of Rule 142(1A), the 1st respondent ought to have issued tax intimation to the petitioner under Rule 142 (1A). Since it was not done, as rightly argued by the learned counsel for the petitioner, the assessment order, dated 31.03.2022, fell foul of law and is liable to be set aside. The impugned assessment order, dated 31.03.2022, passed by the 1st respondent is set aside with a direction to the 1st respondent to issue a fresh tax intimation to the petitioner in terms of Rule 142(1A) (pre amended Rule 142 (1A)) within two weeks from the date of receipt of copy of this Order - Petition allowed.
Issues: Challenge to combined assessment order for tax, penalty, and interest; Lack of show cause notice as per Rule 142(1A) of CGST Rules.
Summary: The writ petition challenged an order dated 31.03.2022, which was a combined assessment order for tax, penalty, and interest for the period from 01.07.2017 to 31.03.2020. The main argument was the absence of a show cause notice as required by Rule 142(1A) of the Central Goods and Services Tax (CGST) Rules, 2017, which mandates communication of tax details before issuing a notice. The petitioner contended that the failure to issue this communication deprived them of the opportunity to respond before the notice under Section 74(1) of CGST Rules. The Government Pleader argued that the issuance of such communication was discretionary post-amendment and supported the actions taken by the assessing authority. The Court examined Rule 142(1A) of CGST Rules, both pre and post-amendment. Pre-amendment, the rule mandated the issuance of tax details before serving a notice, using the word "shall," indicating a mandatory procedure. Post-amendment, the term "shall" was replaced with "may," making the issuance of communication discretionary. The Court noted that while the 3rd respondent issued an intimation under Rule 142(1A) for the period 2017-18 and 2018-19, the 1st respondent directly issued a show cause notice for the period from 01.07.2017 to 31.03.2021 without prior intimation. The Court held that since the notice covered both pre and post-amendment periods, the lack of prior tax intimation violated the law, benefiting the petitioner. Consequently, the impugned assessment order was set aside, directing the respondent to issue a fresh tax intimation in compliance with Rule 142(1A) within two weeks. In conclusion, the Court found the assessment order invalid due to the absence of a prior tax intimation as required by Rule 142(1A) of CGST Rules, setting it aside and directing the issuance of a fresh intimation to the petitioner within a specified timeframe.
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