Chitra Automobile Vs State of Jharkhand (Jharkhand High Court)
Issue of DRC-07 within 5 days of issuance of DRC-01 is violation of principles of natural justice
Lack of clarity w.r.t. reasons/ contraventions in SCN violates principles of natural justice
The Hon’ble Jharkhand High Court in the matter of M/s. Chitra Automobile v. the State of Jharkhand and Ors. [W.P. (T) No. 4784 of 2022 dated January 24, 2023] quashed and set aside the Show Cause Notice (“SCN”), and consequential summary of the SCN in Form GST DRC-01 and summary of order in Form GST DRC-07, issued to the assessee, on the grounds that the SCN did not fulfil the ingredients properly and thus amounted to the violation of the principles of natural justice. Held that, the SCN must clearly state the contravention for which the assessee is charged, in order to have the opportunity to the assessee for defending themselves.
Facts:
M/s Chitra Automobile (“the Petitioner”) is engaged in the business of trading of two wheeler bikes and its parts. For the furtherance of its business, the Petitioner receives input services and goods and claims Input Tax Credit (“ITC”) on such inward supplies in accordance with Section 16 of the Central Goods and Services Act, 2017 (“the CGST Act”).
The Petitioner was served with a SCN dated February 12, 2022 (“the Impugned SCN”) along with the summary of the SCN in Form GST DRC-01, for alleged violation of the provisions of the CGST Act for the period March, 2019 and a total demand of INR 30,22,586/- including GST and interest was made. However, the Revenue Department (“the Respondent”) issued summary of the order in Form GST DRC-07 dated February 12, 2022 (“the Impugned Order”) for non-furnishing of reply to the SCN by the Petitioner.
The Petitioner contended that the Impugned SCN was vague and did not mention the reasons for which it was charged and for such reasons the Impugned SCN was in violation of the rule of law and principles of natural justice. Further, the Impugned Order was issued just within five days of issuance of the Impugned SCN.
The Respondent contended that the writ petition was not maintainable as the Petitioner has alternative remedy of filing appeal against any decision or order before the Appellate Authority under Section 107(1) of the CGST Act but it has not availed the same. Further, the Petitioner filed its Form GSTR 3B after the due-date and hence ITC to the tune of INR 22,01,732.12/- cannot be availed as it is in violation of Section 16(4) of the CGST Act and therefore the Petitioner is liable to pay the GST liability as issued in the Impugned Order.
Issue:
Whether the Impugned SCN and the Impugned Order are sustainable?
Held:
The Hon’ble Jharkhand High Court in W.P. (T) No. 4784 of 2022 held as under:
