GST tax demand proceedings without Form DRC-01A Part A pre-intimation under r.142(1A); show-cause notice set aside, remitted

Initiation of proceedings under s.74 CGST Act was challenged for breach of natural justice and statutory procedure on the ground that the pre-show cause intimation in Part A of Form GST DRC-01A under r.142(1A) was not issued. The HC held that, for the relevant pre-amendment period, non-issuance of the r.142(1A) intimation vitiated the initiation itself, and subsequent reminders could not cure this inherent defect; consistent views in prior HC and Delhi HC decisions were followed. The impugned show cause notice was set aside and the matter remitted to the competent authority to initiate fresh proceedings in accordance with law, and the writ petition was allowed.

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Issues:
Challenge to order under Section 74(9) of the Central Goods and Service Tax Act, 2017 - Requirement of notice in Part A of FORM GST DRC-01A before passing order - Jurisdictional validity of proceedings initiated without notice.

Analysis:
The writ petition challenged an order dated February 23, 2021, passed by respondent No.2 under Section 74(9) of the Central Goods and Service Tax Act, 2017. The petitioner contended that as per Rule 142(1A) of the Central Goods and Service Tax Rules, 2017, before passing any order under Section 74, a show cause notice in Part A of FORM GST DRC-01A was mandatory. The absence of this notice deprived the petitioner of a fair opportunity to respond, rendering subsequent proceedings jurisdictionally flawed.

The petitioner relied on a Division Bench judgment of the Delhi High Court and an order of the Allahabad High Court to support the argument. In response, the respondents acknowledged the non-issuance of the required notice but argued that subsequent reminders provided the petitioner with a fair hearing opportunity, which was not utilized. The respondents contended that the impugned order was appealable under Section 107 of the Act.

After considering the arguments, the Court held in favor of the petitioner. It noted that the initiation of proceedings against the petitioner without issuing the mandatory notice in Part A of FORM GST DRC-01A was a jurisdictional flaw. The Court emphasized that subsequent reminders could not rectify the inherent defect in the proceedings. Citing precedents from the Delhi High Court and the Allahabad High Court, the Court concluded that the impugned order was to be quashed, allowing the writ petition. The Court granted liberty to the respondents to initiate fresh proceedings against the petitioner in compliance with the law.

In conclusion, the Court allowed the writ petition, quashed the impugned order dated November 10, 2022, and permitted the respondents to initiate fresh proceedings against the petitioner in accordance with the legal requirements, emphasizing the necessity of complying with procedural mandates for a fair adjudication process.

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