A division bench of the Allahabad High Court has observed that the requirement of pre-show cause notice is aimed at reducing the number of litigations and the department is bound to follow the principles of natural justice during the proceedings.
The department contended before the High Court that now there is no requirement to send a statement in Part-A of GST DRC-01A under Rule 142(1A) of the CGST Rules in view of the amendment in Rule 142(1A) by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs by Notification No.79/2020 dated 15.10.2020.
The division bench comprising Justice Surya Prakash Kesarwani and Justice Jayant Banerji held that perusal of Form GST DRC-01A under rule 142(1A) of the Rules indicates that it is a pre-show cause notice intimation with reference to Section 73(1)/(5) or Section 74(1)/(5) to an assessee so that either he may deposit the amount of tax and interest or he may disagree to the ascertainment resulting in show cause notice under Section 73(1) or Section 74(1), as the case may be.
“Likewise, such an intimation in Form GST DRC-01A provides an opportunity to the dealer to resolve the dispute by depositing or in case of disagreement to face the adjudication proceedings under the Act. Thus, prima facie, it appears that Section 74(1) read with Rule 142(1A) intends to afford an opportunity to the dealer/ assessee on a pre-show cause notice stage which shall ultimately benefit both, i.e the assessee and the department, and shall also reduce litigation. This also indicates to follow the principles of natural justice at a pre-show cause notice stage,” the bench said.
M/S Nanhey Mal Munna Lal vs State Of U.P. And 4 Others
CITATION: 2022 TAXSCAN (HC) 179
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