The Jharkhand High Court has recently quashed the Show Cause Notice ( SCN ) and Demand Order against the assessee as infructuous for the demand of penalty of 100% of Goods and Services Tax ( GST ) dues in the Form GST DRC-07.
The proceedings, resultant Show Cause Notice, Summary of Show Cause Notice and Demand Order were issued against the petitioner on the basis of an alleged mismatch in the GST returns GSTR-3B and GSTR-2A for the relevant period.
“The show-cause notice does not strike out the relevant particulars and does not even enumerate the contravention which the petitioners have been called upon to reply. These proceedings were initiated allegedly on account of a mismatch in GSTR-3B and GSTR-2A for the period in question and that the petitioners have taken undue ITC to which they were not entitled”, Deepak Kr. Sinha, advocate for the petitioner submitted.
The revenue representative Deepak Kr. Dubey countered the arguments with the submission that, “Plea of an alternative remedy of appeal under section 107 of the Act of 2017 has been taken. Otherwise, the common flank in both these counter affidavits is that GSTN provides for a standard format in which only notices can be issued to the assessee. The Deputy Commissioner of State Tax, Godda Circle, Godda has therefore followed the procedure by mentioning the violations and charges on the petitioner i.e. the difference between GSTR-3B and 2A.”
The bench took note that “notices under section 73(1) of the Act of 2017 at Annexure-2 in the respective writ petitions are in the standard format and neither any particulars have been struck off, nor specific contravention have been indicated to enable the petitioners to furnish a proper reply to defend themselves.”
The Division Bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan observed that “Levy of the penalty of 100% of tax dues reflected in the Summary of the Order contained in Form GST DRC-07 vide Annexure-4 in the respective writ petitions are also in the teeth of the provisions of Section 73(9) of the Act of 2017, wherein while passing an adjudication order, the Proper Officer can levy penalty up to 10% of tax dues only. The above infirmity clearly shows non-application of mind on the part of the Deputy Commissioner, State Tax, Godda Circle, Godda.”
It was further observed that the proceedings also suffer from a violation of principles of natural justice and the procedure prescribed under section 73 of the Goods and Services Tax Act.
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