2024 (11) TMI 40 - HC - GST

Violation of principes of natural justice - Challenge to SCN - SCN challenged on the ground that the impugned show cause notices are in nature of final order and the order-in-original is passed without giving an opportunity of hearing - Availment of ITC from fictitious firm i.e. M/s. Magnifico Minerals Private Limited - contravention of provisions of Section 16(2) of the GST Act - HELD THAT - On perusal of the show cause notices dated 24.11.2023 and 28.12.2023, it is apparent that the respondent No. 2 has predetermined the demand while issuing the show cause notice on the basis of the reply filed by the petitioner and pursuant to the intimation, the tax ascertained is payable under Section 75 (4) of GST Act in FORM GST-DRC-01A. It is pertinent to note that in the grounds of show notice, there is no mention with regard to the word show cause notice except on the front page FORM DRC-01 is printed - the impugned show cause notices are issued by the respondent No. 2 in form of the order-in-original which cannot be sustained in the eye of law. Both the show cause notices are worded identical based on the same facts and therefore, it would be in the interest of justice to quash the same and remand the matter back to the respondents-authorities. Consequently the order dated 29.12.2023 passed by the respondents also would not survive as show cause notice are quashed, so as to enable the respondent No. 2 to issue the fresh show cause notice - impugned show cause notices and SCN set aside - matter is remanded back to the respondent No. 2 to initiate the fresh proceedings in accordance with law within a period of twelve weeks from the date of receipt of copy of this order. Petition allowed by way of remand.

Issues:
1. Challenge to show cause notices and order passed by respondent No. 2 without opportunity of hearing.
2. Nature of show cause notices as final orders.
3. Validity of show cause notices and order under GST Act.

Analysis:

Issue 1: Challenge to show cause notices and order passed by respondent No. 2 without opportunity of hearing

The petitioner challenged the show cause notices dated 24.11.2023 and 28.12.2023, along with the order dated 29.12.2023 passed by respondent No. 2 for the Financial Year 2017-2018, on the grounds that they were issued without providing an opportunity of hearing. The petitioner argued that the impugned show cause notices were in the form of final orders, prejudging the tax liability without due process.

Issue 2: Nature of show cause notices as final orders

The respondent contended that the show cause notice dated 24.11.2023 had already been converted into an order-in-original in FORM DRC-07, which was being considered for revision to grant the petitioner an opportunity of hearing. However, the Court observed that the show cause notices appeared to have predetermined the tax liability without explicitly providing for a show cause opportunity, rendering them unsustainable in law.

Issue 3: Validity of show cause notices and order under GST Act

Upon examination of the show cause notices dated 24.11.2023 and 28.12.2023, the Court found that respondent No. 2 had determined the tax demand based on the petitioner's reply, issuing the demand under Section 75 (4) of the GST Act in FORM GST-DRC-01A. The Court held that these notices were essentially order-in-original in nature, lacking the necessary show cause element. Consequently, the Court quashed the show cause notices and the order dated 29.12.2023, remanding the matter back to the respondent for fresh proceedings in compliance with the law.

In conclusion, the Court allowed the petition, quashing the impugned show cause notices and order, and directed the respondent to initiate fresh proceedings within twelve weeks from the date of the order.

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