The Summary Order on Form GST DRC-22 was nullified by the Acting Chief Justice Aparesh Kumar Singh and Justice Deepak Roshan bench of the Jharkhand High Court (HC). The authorities made a severe procedural error and an infraction of natural justice by failing to issue a Show Cause Notice (SCN). Also directed for re-adjudication in accordance with law.
M/s Solex Energy Limited, petitioner company, engaged in the business of Engineering, procurement and construction of solar power generating systems and is also a manufacturer of solar panels.
Upon filing a return in Form GSTR 3B for the month of October 2020, the petitioner realized that Rs. 39,77,727 and Rs. 21,060 had been debited from its electronic credit ledger and electronic cash ledger, respectively.
The stated amount has been recovered against the outstanding demand ID that was created by summary of order in Form GST DRC-07 dated 21.01.2019, according to further examination of the electronic liability ledger.
The petitioner voiced his displeasure over the fact that he had never previously received the summary notice in Form GST DRC-01 and summary of statement in Form GST DRC-02, either physically or electronically.
Furthermore, neither the summary notice in Form GST DRC-01, the summary of the statement in Form GST DRC-02, nor the summary order in Form GST DRC-07 were signed by any authority. As a result the petitioner moved against the authorities before the court .
The bench remarked that there are discrepancies between the original records and the papers that were provided to the petitioner in answer to an RTI. Further observed that such a disparity in the records does raise questions about the legitimacy of the adjudication processes, which has resulted in the imposition of the petitioner’s liability for tax, penalty, and interest to the tune of Rs. 1,74,66,875.40.
The Division Bench expressed its opinion after hearing the arguments that the assessment proceedings suffer from major procedural flaws due to the lack of a sufficient show-cause notice. A formal adjudication order is not included before the summary of order that was issued in Form GST DRC-07 on January 21, 2019, either.
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