In W.P.(T) No.4782 of 2022-JHK HC-Notice issued u/s 73(1) of Jharkhand GST Act, 2017 is not mere formality: Jharkhand HC 
Justices Aparesh Kumar Singh & Deepak Roshan [24-01-2023]

Read Order: SANTOSH KUMAR ROY VS  THE STATE OF JHARKHAND

Mansimran Kaur

Ranchi, February 1, 2023: The intent of legislature for issuing a show cause notice along with FORM GST 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, the Jharkhand High Court has observed.

The Division Bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan allowed the instant application and observed  that  stating specific charges in the show cause notice is part of due procedure and fair play in action which are essential requirements of rule of law and has its genesis in Article 14 of the Constitution of India. 

The instant writ application was preferred for quashing and setting aside the impugned purported show cause notice dated January 7, 2022 issued by the  third respondent  in purported exercise of powers under Section 73 of the Jharkhand Goods and Services Tax Act, 2017.

The petition was also filed for quashing the consequential impugned summary of show cause notice in FORM GST DRC-01 issued by the  third respondent  in purported exercise of powers under Rule 142(1) (a) of the Jharkhand Goods and Services Tax Rules, 2017 and for issuance of an appropriate order to the respondents to not attach the business bank account of the petitioner running in the Corporation Bank, Deoghar Branch.

Brief facts of the case were such that the petitioner was engaged in construction work and was  a civil contractor registered under the Central Goods and Service Act, 2017 and the Jharkhand Goods and Service Act, 2017  . The petitioner for supply of taxable services received input services, inputs and capital goods for use in the course or furtherance of its businesses and claims input tax credit on such inward supply in accordance with Section 16 of the Act. 

Thereafter, a show cause notice under Section 73 of GST Act was issued on January 7, 2022 along with summary of show cause in Form DRC-01 of even date, however, the petitioner did not send the reply and finally DRC-07 was issued as per Rule 142 (5) of the Act 2017 on February 9, 2022. 

After considering the submissions, the Court noted that having heard counsel for the parties and after going through the documents available on record and the averments made in the respective affidavits, it transpires that a show cause notice under Section 73(1) of the GST Act, 2017 dated for the tax period of January 2019-February 2019 was issued.

 However, from bare perusal of Annexure-1, it appears that the same was issued in a format without striking out of irrelevant particulars, thus the same was vague and does not spell out clearly the contravention for which the petitioner was  charged. It is in fact worse than summary of show cause notice in Form GST DRC-01 of the same date, the Court noted. 

“It is well settled that the show cause notice issued under Section 73(1) of the Act is not mere a formality”, the Bench added.

As a matter of fact, the intent of the 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 detail giving the facts and circumstances and the grounds for levying tax. However, by going through the impugned show cause notice it appears that it is in a format without striking out the irrelevant particulars.

In fact, no adjudication order was on record and it was only the summary of order issued under DRC-07 which was on record. As a matter of fact, stating specific charges in the show cause notice is part of due procedure and fair play in action which are essential requirements of rule of law and has its genesis in Article 14 of the Constitution of India, the Court further remarked. 

At the outset, the Court observed that having regard to the facts of the case that the show cause notice was in a format and was not in a strict compliance of Section 73 (1) of the GST Act and Rule 142(1) (a) of the Rules and since the principle of natural justice was not compiled in the instant case, the ground of alternative remedy was not acceptable by this Court. For such reasons, the instant application was allowed.