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of <h1>GST proceedings quashed for lack of proper show cause notice under Section 73(1) violating natural justice</h1> The Jharkhand HC allowed a writ petition challenging GST proceedings initiated without proper show cause notice. The petitioner argued that no pre-show ... Violation of principles of natural justice - petitioner submits that in the instant case no pre show cause notice in form of Form GST DRC 01 A was issued intimating him of the liability of tax, interest applicable and/or penalty which if not paid would lead to initiation of adjudication process - procedure prescribed for initiation of proceeding under Section 73 (1) of the JGST Act has not been followed - HELD THAT:- It appears that the respondents have unsuccessfully tried to defend their action, inasmuch as, in para 7 of their supplementary counter affidavit quoted herein above mentioned that the concluding paras of the said inspection report dated 11.01.2020, were treated as notice under Section 73 upon the petitioner The above statements show that the petitioner has been only informed that if he fails to appear before the prescribed authority on prescribed date, the proceeding under Section s 73, 50(1) and 125 will be initiated. The respondents have failed to establish that the petitioner has ever ignored the directions given in the inspection report rather it appears from the entire order sheet (Annexure 3 series) that the petitioner has not only appeared on the date as prescribed in the inspection report but also on various dates a s required by the adjudicating officer. At no point of time, the adjudicating officer has mentioned in the order sheet that the petitioner has failed to appear. Since the inspection report does not fulfill the ingredients of a proper show cause notice it amount to violation of principles of natural justice. The challenge is therefore maintainable in exercise of writ jurisdiction of this Court and the instant writ application deserves to be allowed - Application allowed. Issues:1. Challenge to summary order in Form GST DRC 07 and rectification/withdrawal order in Form GST DRC 08.2. Alleged illegal and arbitrary order passed without authority under JGST Act.3. Lack of pre-show cause notice leading to violation of natural justice principles.Analysis:Issue 1: Challenge to Summary Order and Rectification/Withdrawal OrderThe petitioner sought relief to quash the summary order in Form GST DRC 07 and rectification/withdrawal order in Form GST DRC 08 issued by respondent no.5 for the periods 2017-18, 2018-19, 2019-20, and 2020-21. The petitioner argued that these orders were based on an alleged adjudication order passed by respondent no.3 without proper authority. The inspection report highlighted discrepancies, and the petitioner was directed to appear before the Joint Commissioner failing which proceedings under relevant sections of the JGST Act would be initiated. Despite the petitioner's appearances before respondent no.3, summary orders were issued, leading to the challenge.Issue 2: Alleged Illegal and Arbitrary OrderThe petitioner contended that the order passed by respondent no.3 under Sections 61 and 73 of the JGST Act lacked authority and violated natural justice principles. The petitioner was not provided with a pre-show cause notice, hindering the ability to file objections. The petitioner argued that the proper adjudication process was not followed, leading to prejudice due to the violation of natural justice principles. The respondents admitted to not following the prescribed procedure, further weakening their defense.Issue 3: Lack of Pre-Show Cause NoticeThe court highlighted that the inspection report did not serve as a proper show cause notice under Section 73 of the JGST Act. The respondents' argument that the inspection report itself acted as a notice was refuted. The court emphasized that in cases involving natural justice, terms like 'deemed' notice hold no legal significance. Citing precedent, the court reiterated that any order passed without a proper show cause notice violates natural justice principles and is non est in the eye of the law.In conclusion, the court found in favor of the petitioner, quashing the summary order in Form GST DRC 07 and the rectification/withdrawal order in Form GST DRC 08 for the financial years 2017-18, 2018-19, and 2019-20. The court allowed the writ application, directing the respondents to initiate fresh proceedings following the prescribed procedures under the JGST Act and principles of natural justice.
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