Order Passed without issuance of Proper Show Cause Notice and without giving an opportunity of being heard is liable to be Quashed: Gauhati High Court
The Gauhati High Court, in Ganapati Enterprise v. State of Assam [WP (C) No. 2153 of 2025 dated on April 25, 2025], has nullified an order and its associated show cause notice (SCN) summary, citing the lack of a proper SCN under Section 73(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and the denial of a personal hearing. Ganapati Enterprise challenged the order dated April 28, 2024, arguing it was issued without a valid SCN and that their request for a personal hearing was ignored. The High Court, referencing its prior judgment in Construction Catalysers Pvt. Ltd. v. State of Assam, affirmed that a summary SCN (Form GST DRC-01) cannot substitute a detailed SCN required by Section 73(1). It further stated that the tax determination statement under Section 73(3) doesn’t override the need for a comprehensive SCN. The court emphasized that all communications must adhere to prescribed formats and authentication rules. Additionally, orders issued without a personal hearing violate Section 75(4) of the CGST Act and are thus unsustainable. Consequently, the court set aside the impugned order and the summary SCN, aligning its decision with the principles established in the Construction Catalysers case.
Facts:
M/s. Ganapati Enterprise (“the Petitioner”) has filed a writ petition challenging the order dated April 28, 2024 (“the Impugned Order”) passed by the Adjudicating Authority (“the Respondent”) on the ground that the Impugned order was issued without service of a proper SCN under Section 73(1) of the CGST Act. Despite a request for a personal hearing, no such opportunity was granted to the Petitioner, and the Respondent thereafter passed the Impugned Order.
Issue:
Whether an order can be held to be valid if passed without issuance of a proper SCN and without granting an opportunity of personal hearing?
Held:
The Hon’ble Gauhati High Court in WP (C) No. 2153 of 2025 held as under:
- The issues involved in the present writ petition were identical to the one already considered in paragraph 29 of the judgement passed by the Coordinate Bench in WP(C) No. 3912/2024 dated September 26, 2024 in the case of Construction Catalysers Pvt. Ltd. v. State of Assam. The directions given in paragraph 29 of the said judgment governed the outcome of the present matter as well.
- The Hon’ble Gauhati High Court in Construction Catalysers Pvt. Ltd. v. State of Assam [supra] held that the Summary of the SCN in Form GST DRC-01 cannot be considered as a substitute for a proper SCN issued under Section 73(1) of the CGST Act. Additionally, the Statement of determination of tax issued under Section 73(3) of the CGST Act, does not replace the requirement of issuance of a detailed SCN by the Proper Officer, in terms of Section 73(1) of the CGST Act. Moreover, it emphasized that all communications—including the SCN, statement of determination of tax, and the order—must be issued in their respective formats (GST DRC-01, GST DRC-02, and GST DRC-07) and properly authenticated in the manner provided under Rule 26(3) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
- Further, the Court had also observed in Construction Catalysers Pvt. Ltd. v. State of Assam (supra) that, orders passed without granting an opportunity of personal hearing violate Section 75(4) of the CGST Act and are therefore not sustainable.
- It was accordingly held, that the issues involved in Construction Catalysers Pvt. Ltd. v. State of Assam (supra) and the present writ petition were similar, and therefore the present writ petition was disposed of by setting aside the Impugned Order dated April 28, 2024 and the summary of the SCN dated December 13, 2023.
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