GST adjudication requires proper notice, disclosure of relied upon material, and hearing; non-compliance vitiates demands.

Under the GST framework, a summary notice in DRC-01 and consequential DRC-07 or adjudication orders are invalid where the taxpayer is not given a proper show cause notice, the relied upon materials are not supplied, and no effective personal hearing is afforded. The text states that vague notices, disclosure of the basis of demand, and non-compliance with mandatory statutory procedure and natural justice requirements vitiate the proceedings. It further notes that tax, interest, and penalty demands cannot be sustained where the show cause stage and service requirements are not properly completed, and such defects justify quashing the proceedings and remitting the matter for fresh adjudication in accordance with law.

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Issues: (i) Whether the summary show cause notice in DRC-01 and the consequential DRC-07/adjudication orders were valid when no proper show cause notice, relied upon materials, or personal hearing was afforded under the GST framework; (ii) whether the impugned tax, interest and penalty proceedings could be sustained despite non-compliance with the mandatory procedural requirements under the Act and Rules.

Issue (i): Whether the summary show cause notice in DRC-01 and the consequential DRC-07/adjudication orders were valid when no proper show cause notice, relied upon materials, or personal hearing was afforded under the GST framework.

Analysis: The proceedings were found to suffer from fundamental procedural defects. The notices issued in the form of DRC-01 were held to be vague and lacking in particulars, and the record did not show that the assessees were supplied relied upon documents or given an effective opportunity to answer the material forming the basis of the demand. The absence of a proper show cause notice and denial of personal hearing were treated as violations of the statutory procedure and the principles of natural justice.

Conclusion: The summary notice and consequential orders were held invalid and unsustainable.

Issue (ii): Whether the impugned tax, interest and penalty proceedings could be sustained despite non-compliance with the mandatory procedural requirements under the Act and Rules.

Analysis: The impugned demands were confirmed without following the mandatory procedure contemplated under the GST enactment. The Court recorded that in the cases before it the show cause stage had not been properly complied with, the adjudication orders were not shown to have been duly served in all cases, and no satisfactory material was produced to establish compliance with the statutory safeguards. The defect was treated as going to the root of the proceedings.

Conclusion: The impugned proceedings were quashed and the matters were remitted for fresh adjudication in accordance with law.

Final Conclusion: The writ petitions succeeded, the impugned GST demands and connected orders were set aside, and the matters were sent back for fresh decision after compliance with statutory procedure and natural justice.

Ratio Decidendi: In GST adjudication, issuance of a proper show cause notice, disclosure of relied upon material, and grant of an effective opportunity of hearing are mandatory; non-compliance vitiates the entire proceeding.

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