V.R.S. Traders Vs Assistant Commissioner (State Taxes) (Madras High Court)
The Madras High Court considered writ petitions challenging orders dated 05.08.2021 concerning GSTIN Nos. 33CDVPR5729K1ZP/2017-2018, 33CDVPR5729K1ZP/2019-2020 and 33CDVPR5729K1ZP/2018-2019. The petitioner, a sole proprietary concern engaged in iron and steel scrap business, had received Form DRC-01A dated 15.10.2020 alleging wrongful availment of ITC on purchases from suppliers alleged to be non-existent or not conducting business. The proposed amount was Rs.3,60,02,382/-. The petitioner replied on 19.10.2020 without accepting the proposal. The Revenue thereafter passed orders under Section 75(1), involving ITC reversal under Section 74 and penalty. The Court noted that, after a DRC-01A notice under Section 74(5), where the proposal is not accepted, the next step is issuance of a notice under Section 74(1) in DRC-01. On the Court’s specific query, the Revenue confirmed that no DRC-01 notice under Section 74(1) had been issued. The Court held that DRC-01 under Section 74(1) is an independent and mandatory notice before passing the assessment order. Since it was not issued, the proceedings culminating in the impugned orders were vitiated. The Court therefore quashed the respective impugned orders and remitted all three matters to the respondent for reconsideration from the stage where proceedings had stopped, namely after DRC-01A, with directions to issue DRC-01, provide the petitioner a fair opportunity of being heard and pass necessary orders. No costs were imposed and connected miscellaneous petitions were closed.
