In a significant case, the Jharkhand High Court quashed the show-cause notice issued under Section 73 of the Jharkhand Goods and Service Tax Act, without stating contraventions committed by the petitioner.
The writ petition was filed by Chitra Automobile against the show-cause notice issued under Section 73 of the Jharkhand Goods and Service Tax Act, without stating contraventions committed by the petitioner. The petitioner firm is engaged in the trading of Two Wheeler Bikes and their parts, which are sold to various customers. The petitioner is registered under the Central Goods and Services Tax Act, 2017, and the Jharkhand Goods and Service Tax Act, 2017, for the supply of taxable services in the State of Jharkhand.
Furthermore, the petitioner, for the supply of taxable services, receives input services, inputs, and capital goods for use in the course or furtherance of its business, claiming input tax credit on such inward supplies in accordance with Section 16 of the JGST Act, 2017/CGST Act, 2017.
The petitioner has consistently filed its monthly returns of outgoing supplies in FORM GSTR-1 under Section 37 of the JGST Act, read the JGST Rules, and its monthly return of self-assessment in FORM GSTR-3B under Section 39 read with rule 61 (5) of the Act during the period under dispute.
Suddenly, the JGST Act, 2017’s Section 73 Show Cause Notice was sent, together with FORM GST DRC-01 of the same date, claiming that the petitioner had broken rules pertaining to the Tax Period: MAR 2019. The petitioner was requested to respond to the show-cause notice. The entire amount demanded, including interest, CGST, and SGST, was Rs. 30,22,586.00. A summary of the order in FORM GST DRC-07 pursuant to Rule 142(5) of the JGST Act, 2017, was given on February 17, 2022, since the petitioner has not submitted a response to the show-cause notice of February 12, 2022.
The petitioner’s counsel, Ravi Kumar, argues that the show-cause notice for the tax period of March 2019 under Section 73(1) of the JGST Act, 2017, dated 12.02.2022 (Annexure1) is ambiguous, contains unnecessary details, and fails to clearly state the offense for which the petitioner is charged.
Further, the petitioner’s counsel argued that the show-cause notice issued is in violation of the rule of law and principles of natural justice. He contended that the initiation of proceeding under Section 73(1) of the JGST Act is not an empty formality or a mere pretext but integral to principles of natural justice and fair play.
Based on the counter-affidavit, Sachin Kumar, AAG-II for the respondent State, argues that the petitioner has an effective and alternative remedy in Section 107(1) of the GST Act to file an appeal against any decision or order before the Appellate Authority, so the current writ petition is not maintainable in court. The petitioner has not taken advantage of the summary order in FORM GST DRC-07 dated 17.02.2022, even though they are aware of its issuing.
The court during the appeal proceedings observed that the petitioner received a show-cause notice under Section 73(1) of the Act. The notice was sent in a format that did not omit any pertinent details, so it won’t be overstated in handling the case because it does not list the specific violations for which the petitioner is accused.
After analyzing the facts and arguments of both parties, the division bench of Justice Aparesh Kumar Singh (Acting Chief Justice) and Justice Deepak Roshan observed that the show-cause notice in the instant case does not fulfill the ingredients of a proper show-cause notice and thus amounts to a violation of principles of natural justice; the challenge is maintainable in the exercise of writ jurisdiction of this Court. Therefore, the bench quashed the show-cause notice issued under Section 73 of the Jharkhand Goods and Service Tax Act without stating contraventions committed by the petitioner.
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