Shree Ram Agrotech Vs State of Jharkhand (Jharkhand High Court)
Hon’ble Jharkhand High Court (‘HC’) in the case of M/s Shree Ram Agrotech “the petitioner” has set aside the demand order & consequent recovery proceedings in view of non-compliance with provisions regarding issuance of Show-Cause Notice and adjudication order as prescribed under GST law. Captioned ruling has been analyzed in this update.
A. ISSUE INVOLVED
- Whether the recovery notice issued based on summary order in DRC-07 demanding tax, interest, and penalty without following due procedure prescribed under GST law including issuance of Show-cause Notice and passing adjudication order is legally valid?
B. FACTS OF THE CASE
- The petitioner is primarily engaged in the business of trading of ferrous waste and scrap, iron, steel, ingots and other metal articles and is registered under GST.
- The petitioner directly received a recovery notice from the department without getting DRC-01, Show-Cause Notice (SCN) and adjudication order and aforesaid documents were not provided even after specific request by him.
- The petitioner approached Appellate Authority however the appeal was dismissed on technical grounds without considering the merits of the case.
C. CONTENTION OF THE APPLICANT
- That Rule 142 of the JGST Rules requires that along with DRC-01, a detailed Show Cause Notice, as per Section 73 (1), shall also be served to the Assessee prior to imposition of any tax, interest, or penalty.
- That as per Section 73 (9) of the JGST Act, 2017 a detailed adjudication order is to be passed and served to the assesse for imposing any tax, interest, or penalty.
- That the department was requested to provide a copy of the show cause notice, but it was not provided since it was not available with the department itself.
D. CONTENTION OF THE DEPARTMENT
- That they have issued and served Form GST DRC-01 dated 20.12.2018, which is a summary of show cause notice to the Petitioner.
- That since the Appellate Authority, vide Impugned Appellate Order, has already dismissed the appeal of the Petitioner, therefore no interference with the Summary Order in Form GST DRC – 07 is required.
E. RELEVANT LEGAL PROVISIONS REFERRED
Section 73(1) of CGST/JGST Act, 2017
Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
Section 73(9) of CGST/JGST Act, 2017
The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
Rule 142 of CGST/JGST Rules, 2017-Notice and order for demand of amounts payable under the Act
(1) The proper officer shall serve, along with the
(a) Notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01,
(1A) The proper officer may, before service of Notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.
F. OBSERVATION AND DECISION BY HC
Observations of HC
