In WRIT TAX No.1512 of 2022-ALL HC- Allahabad HC quashes order passed u/s 74(9) of CGST Act as notice under Rule 142(1A) of CGST Rules in Part A of FORM GST DRC-01A was not issued
Justices Rajesh Bindal & J.J. Munir [02-01-2023]

Read Order: M/s Skyline Automation Industries v. State of U.P. and another 

Tulip Kanth

Lucknow, January 28, 2023:While considering a matter prior to the amendment of Rule 142(1A) of the CGST Rules with effect from October 15, 2020, the Allahabad High Court has allowed a petition against the order passed under section 74(9) of the CGST Act, 2017 after considering the fact that for initiation of proceedings against the petitioner a notice under Rule 142(1A) in Part A of FORM GST DRC-01A was not issued.

“Any subsequent reminder will not cure inherent defect in proceedings initiated against the petitioner”, the Division Bench of Justice Rajesh Bindal and Justice J.J. Munir noted.

The petitioner challenged the order passed by the second respondent u/s 74(9) of the Central Goods and Service Tax Act, 2017 (Act). It was the petitioner’s case that in terms of the provisions of Rule 142(1A) of the Central Goods and Service Tax Rules, 2017 (Rules) as existing at the time of initiation of the proceedings against the petitioner before it was amended on October 15, 2020, before passing any order under Section 74 of the Act, a show cause notice in Part A of FORM GST DRC-01A was required to be issued. 

It was only thereafter that the jurisdiction would have been vested with the Competent Authority to pass order. In the case in hand, notice in Part A of FORM GST DRC-01A having not been issued, any subsequent proceeding was said to be without jurisdiction as the petitioner did not have fair opportunity to respond.

On the contrary, the respondents, while not disputing the fact that notice in Part A of FORM GST DRC-01A was not issued, submitted that subsequent reminders had given fair opportunity of hearing to the petitioner to place his case before the authority concerned, which he failed to avail of. The impugned order now passed was appealable under Section 107 of the Act.

The Division Bench was of the opinion that the writ petition deserved to be allowed, as admittedly for initiation of proceedings against the petitioner a notice as provided for under Rule 142(1A) of the Rules in Part A of FORM GST DRC-01A was not issued, which provided for communication of details of any tax, interest and penalties as ascertained by the officer. 

Reference was also made to the judgment of the Delhi High Court in Gulati Enterprises v. Central Board of Indirect Taxes and Customs & others,  wherein also in identical facts pertaining to a case prior to the amendment of Rule 142(1A) of the Rules with effect from October 15, 2020, the impugned show cause notice was set aside and the matter was remitted back to authority concerned to initiate fresh proceedings in accordance with law. 

The Bench also considered the fact that in the case in hand, the only difference was that subsequent thereto an order had also been passed on November 10, 2022, but it held that the same would not make any difference. 

“As the initiation of proceedings itself are bad, the order passed consequent thereto will also fall”, the High Court remarked.

Thus, allowing the petition, the Bench  quashed the impugned notice dated November 10, 2022. However, the respondents were granted the liberty to initiate fresh proceedings against the petitioner in accordance with law.