Show Cause Notice (SCN) issued under section 73(1) of Central Goods and Services Act, 2017 (CGST) is not a mere formality, opined the bench of Acting Chief Justice Aparesh Kumar Singh and Justice Deep Roshan of Jharkhand High court.
The Court directed for the re-adjudication according to the clear procedure of law.
The petitioner Santosh Kumar Roy, engaged in construction work and is a civil contractor and has registered under the Central Goods and Service Act, 2017 and the Jharkhand Goods and Service Act, 2017.
The petitioner for supply of taxable services received input services, inputs and capital goods for use in the course or furtherance of its businesses and claimed input tax credit on such inward supply in accordance with Section 16 of the CGST Act.
Due to the petitioner’s inability to respond to the notification in FORM ASMT-10 issued pursuant to Section 61 of the CGST Act 2017, DRC-01A was issued.
After that, a DRC-07 was issued in pursuance of Rule 142(5) of the CGST Act after a SCN under Section 73 of the JGST Act and a summary of show cause in Form DRC-01 of an even date were sent. However, the petitioner did not respond.
Counsel for the petitioner submitted that the show-cause notice under Section 73(1) of the JGST Act, 2017 for the tax period January 2019-February 2019 are in a format without striking out the irrelevant particulars, is vague and does not spell out the contravention for which the petitioner is charged.
The respondent counsel, on the other hand, argued that the petitioner violated the provisions under Section 16(4) of the JGST Act, 2017 with regard to the tax period from January to February 2019, as evidenced by the petitioner’s failure to respond to the notice issued under ASMT-10, DRC-01A, and finally the SCN issued under Section 73 (1) of the CGST Act.
The SCN was given in a format without the removal of unnecessary details, the bench said, making it ambiguous and failing to specify the violation for which the petitioner is being held accountable.
Regarding the facts, the HC noted that the format of the show cause notice does not strictly comply with Section 73(1) of the JGST Act and Rule 142(1)(a) of the Rules, and since the principle of natural justice has not been upheld in the present case, the court will not accept the argument that an alternative remedy is available.
The division bench quashed and set aside the disputed show cause notice and DRC 01 and also the summary of order issued under DRC-07.
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