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of <h1>Show-cause notice under Section 74(1) must allow statutory hearing under Sections 75(4)-75(5); identical pre-decisional forms invalid</h1> <h3>M/s Jai Jawan Kastha Bhandar, M/s Priti Enterprises, M/s Nisha Enterprises, M/s Mahaveer Steel Industries Versus The State of Jharkhand.</h3> M/s Jai Jawan Kastha Bhandar, M/s Priti Enterprises, M/s Nisha Enterprises, M/s Mahaveer Steel Industries Versus The State of Jharkhand. - 2022 (65) ... Issues Involved:1. Quashing of summary show-cause notices issued in Form GST DRC-01.2. Quashing of adjudication orders passed under Section 74(9) of the JGST Act, 2017.3. Quashing of consequential Demand Notices issued in Form GST DRC-07.4. Violation of principles of natural justice.5. Non-issuance of proper show-cause notices under Section 74(1) of the JGST Act.6. Denial of opportunity to file a reply and hearing.7. Non-supply of relied-upon documents to petitioners.8. Maintainability of writ petitions under Article 226 of the Constitution of India.Detailed Analysis:1. Quashing of Summary Show-Cause Notices Issued in Form GST DRC-01:The petitioners argued that the summary show-cause notices in Form GST DRC-01 pre-judged and pre-decided the entire issue, fastening liability towards tax, interest, and penalty upon them without proper adjudication. The court found that the summary show-cause notices issued did not fulfill the requirements of a proper show-cause notice under Section 74(1) of the JGST Act. The notices lacked specific charges and did not provide an opportunity for the petitioners to defend themselves, thereby violating principles of natural justice.2. Quashing of Adjudication Orders Passed Under Section 74(9) of the JGST Act, 2017:The petitioners contended that the adjudication orders were passed without granting any opportunity of hearing, in a pre-judged manner. The court noted that the adjudication orders confirmed the tax, interest, and penalty without any variation from the summary show-cause notices, indicating a pre-determined liability. The court held that the adjudication orders were passed in violation of Section 75(4) and (5) of the JGST Act, which mandate granting an opportunity of hearing and allowing adjournments for sufficient cause.3. Quashing of Consequential Demand Notices Issued in Form GST DRC-07:The petitioners challenged the consequential demand notices issued in Form GST DRC-07, which quantified the demand of tax, interest, and penalty as indicated in the adjudication orders. The court found that the demand notices were issued based on flawed adjudication orders and improper show-cause notices. Consequently, the demand notices were also quashed.4. Violation of Principles of Natural Justice:The petitioners argued that the entire proceedings were conducted in violation of principles of natural justice. The court observed that the petitioners were not provided with the relied-upon documents, nor were they given an opportunity to cross-examine witnesses. The court held that the denial of a proper opportunity to defend themselves amounted to a violation of natural justice.5. Non-Issuance of Proper Show-Cause Notices Under Section 74(1) of the JGST Act:The petitioners contended that no proper show-cause notices were issued in terms of Section 74(1) of the JGST Act. The court noted that the summary show-cause notices did not specify the charges clearly and lacked details, making it impossible for the petitioners to respond effectively. The court emphasized that a proper show-cause notice is a sine qua non for initiating proceedings under Section 74.6. Denial of Opportunity to File a Reply and Hearing:The court found that the summary show-cause notices did not indicate any date for filing a reply, nor were the petitioners given an opportunity to file their replies or be heard. The court held that this denial of opportunity violated Section 75(4) of the JGST Act, which mandates granting an opportunity of hearing where any adverse decision is contemplated.7. Non-Supply of Relied-Upon Documents to Petitioners:The petitioners argued that none of the relied-upon documents in the intelligence notes were supplied to them, making it impossible to defend against the charges. The court agreed, noting that the failure to provide these documents violated principles of natural justice and the petitioners' right to a fair hearing.8. Maintainability of Writ Petitions Under Article 226 of the Constitution of India:The petitioners argued that the writ petitions were maintainable under Article 226 due to the violation of principles of natural justice. The court agreed, citing precedents that allow for writ jurisdiction in cases where natural justice is violated. The court held that the writ petitions were maintainable and justified in the given circumstances.Conclusion:The court quashed the impugned summary show-cause notices, adjudication orders, and demand notices. The respondents were granted liberty to initiate fresh proceedings with proper show-cause notices in accordance with the law. The court emphasized that it did not delve into the merits of the case and that the adjudicating officer should take a fresh decision without being influenced by the observations made in this judgment. The writ petitions were allowed to the extent indicated.
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