Case Law Details
Laxmi Traders Proprietor Dipanshu Garg Vs Principal Commissioner of GST Department of Trade And Taxes & Anr (Delhi High Court)
The case of Laxmi Traders, represented by Dipanshu Garg, against the Principal Commissioner of GST Department of Trade and Taxes & Anr, brought before the Delhi High Court, challenges the validity of a demand order issued without prior issuance of a show cause notice.
The Delhi High Court’s judgment, dated 07.02.2024, highlights a crucial procedural lapse in the demand creation process. Despite the purported order under Section 73 of the Central Goods and Services Tax Act, 2017, no show cause notice or DRC-01 was issued to the petitioner beforehand. The absence of this essential procedural step is a clear violation of Section 73, which mandates the issuance of a show cause notice prior to passing any order creating a demand.
The court’s scrutiny reveals that while a show cause notice proposing to cancel the GST registration was indeed issued on 16.06.2023, it was subsequently dropped on 25.08.2023, based on the petitioner’s response. However, this does not absolve the authorities from the obligation to issue a fresh show cause notice specifically concerning the demand creation.
The judgment emphasizes the significance of adhering to principles of natural justice. The absence of a show cause notice deprives the petitioner of the opportunity to present their case adequately and respond to the allegations against them. As such, the court rightly quashes the impugned order on this procedural ground alone.
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