GST: Jharkhand High Court quashes SCN on wrongful availment of ITC as it was vague, lacked details [Read Order]

The Jharkhand High Court quashed the Show Cause Notice in respect of wrongful availment of Input Tax Credit (ITC) as it was vague and lacked details.

The petitioner, M/s Nkas Services Private Limited has challenged the show-cause notice issued under Section 74 of the JGST Act on the grounds that it was vague and does not disclose the offense and contraventions as it is a mere mechanical reproduction of the provisions of Section 74 without striking of the irrelevant portions. It is thus incapable of any reply and does not fulfill the ingredients of a notice in the eyes of law. Petitioner would be denied the opportunity to properly defend itself. It is, therefore, in violation of the principles of natural justice. The essential requirements of the proper notice are that it should specifically state charges to which the notice has to reply.

The petitioner has sought to quash the impugned show-cause notice issued under Section 74 of the Act being in violation of principles of natural justice and lacking in jurisdictional facts to initiate a proceeding under Section 74 of the Act on the allegations that the petitioner has wrongfully availed the input tax credit by reason of fraud or any willful misstatement or suppression of facts to evade tax or not paid or short paid or erroneously got a refund of any tax.

The division bench of Justice Aparesh Kumar Singh and Justice Anubha Rawat Choudhary noted that the impugned show-cause notice does not fulfill the ingredients of proper show-cause notice and thus amounts to a violation of principles of natural justice, the challenge is entertainable in the exercise of writ jurisdiction of this Court.

Accordingly, the court has ruled that the impugned notice and the summary of show-cause notice in Form GST DRC-01 are quashed.

“However, since this Court has not gone into the merits of the challenge, respondents are at liberty to initiate fresh proceedings from the same stage in accordance with law within a period of four weeks from today,” the court said.

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