In a recent ruling, the Gauhati High Court reiterated that the issuance of a Summary of Show Cause Notice ( SCN ) under Form GST DRC-01 cannot be a substitute for a formal SCN as required under Section 73(1) of the Central Goods and Services Tax ( CGST ) Act, 2017.
The Court observed that for proceedings under Section 73 to be validly initiated, a proper SCN must be issued by the Proper Officer, irrespective of whether a summary has been generated.
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The petitioner in the present case challenged the legality of the summary of SCN dated 28.09.2023 and the summary of the order dated 30.12.2023, issued by the Assistant Commissioner of State Tax, without the issuance of a formal SCN or a speaking order under Section 73 of GST Act.
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The petitioner also contended that the summary order was passed without being granted an opportunity of hearing, thereby violating principles of natural justice.
Both counsels referred to the decision of a Co-ordinate Bench of the High Court in Construction Catalysers Pvt. Ltd. v. State of Assam & Ors., decided on 26.09.2024, which had dealt with an identical issue. Relying on Paragraph 29 of that judgment, the Court in the present case observed that the earlier ruling squarely covered the controversy at hand.
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In Construction Catalysers Pvt. Ltd., the Court had categorically held that a summary in Form GST DRC-01 is merely a derivative of the proper SCN and cannot replace it. It was clarified that the statement of determination of tax under Section 73(3), often attached to the summary, is not a substitute for the SCN under Section 73(1). Consequently, any proceedings initiated without a valid SCN are rendered legally unsustainable.
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Moreover, the Court in Construction Catalysers Pvt. Ltd case observed that all actions under Section 73, including the issuance of SCN, statement of tax determination, and final order, must be undertaken by the Proper Officer defined under Section 2(91) of the CGST Act. It further stated that such documents must be authenticated in accordance with Rule 26(3) of the CGST Rules, 2017. The bench also found that the impugned orders violated Section 75(4) of the CGST Act, as no opportunity of hearing was provided to the petitioner.
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Justices Arun Dev Choudhary set aside the impugned summary of SCN and summary order, the High Court granted liberty to the respondent authorities to initiate fresh proceedings under Section 73, if they deem it necessary.
Accordingly, relying on the precedent, the High Court disposed of the petition by setting aside the summary of show cause notice and the summary of order.
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