The division bench of the Jharkhand High Court has held that summary of show cause notice without issue of show cause notice u/s 74(1) and quashes order in violation of Rule 142(1)(a) of Goods and Services Tax Rules.
As part of the search conducted by the respondents on the premises of the petitioner,M/s. Juhi Industries Pvt. Ltd.under Section 67 of the JGST Act two summary of show-cause notices in Form DRC-01 were issued, one for the period from 01.07.2017 to 13.8.2018 and another for the period from April 2018 to 31.8.2018 under Section 74(1) of the JGST Act.
The petitioner under a bonafide and mistaken belief of law submitted its concise reply in Form DRC-06 explaining that the ITC has been legally claimed by them and the goods have been physically received by them. Respondent thereupon passed two separate orders, both under Section 74(9) of the JGST Act and confirmed tax demand, interest, and penalty, and issued a Summary of Order. The aggrieved assessee preferred writ petition before the jurisdictional High
The counsel for the petitioner submitted that Rule 142(1)(a) of the JGST Rules provides that the summary of show cause notice in Form DRC-01 should be issued “along with” the show cause notice under Section 74(1) which is mandatory and imperative.The entire proceeding in both cases is without jurisdiction and the subsequent proceedings/impugned Orders are not sustainable being contrary to Section 74(1) of the JGST Act.
The Tribunal observed that the foundation of the proceeding in both the cases suffer from material irregularity and hence not sustainable being contrary to Section 74(1) of the JGST Act; thus, the subsequent proceedings/impugned Orders cannot sanctify the same. The Tribunal further observed that a bonafide mistake or consent by the assessee cannot confer any jurisdiction upon the proper officer. The jurisdiction must flow from the statute itself. The rule of estoppels is the rule of equity which has no role in matters of taxation.
The Coram of Mr. Justice Aparesh Kumar Singh and Mr. Justice Deepak Roshan quashed the impugned show cause notice and final order and held that “we are of the considered view that the impugned show cause notice in both the cases 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”.
Adv. Mr. Kartik Kurmi and Mr. Sachin Kumar appeared on behalf of the petitioner and the respondents respectively.
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