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Tax authorities cannot issue summary orders without serving prior notice under GST Rules - violation of natural justice Gujarat HC quashed a summary order in Form GST DRC-07 issued by tax authorities without serving prior notice in Form DRC-01 as required under GST Rules. ...
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Tax authorities cannot issue summary orders without serving prior notice under GST Rules - violation of natural justice
Gujarat HC quashed a summary order in Form GST DRC-07 issued by tax authorities without serving prior notice in Form DRC-01 as required under GST Rules. The court held that passing the order without notice violated principles of natural justice, as the order lacked reasons and was issued without giving the petitioner an opportunity to be heard. The matter was remanded for fresh adjudication with proper hearing within 12 weeks.
Issues: Petition under Article 227 for quashing GST recovery notice and summary order, lack of notice in Form DRC-01, discrepancy in ITC between GSTR-3B and GSTR-2A, absence of reasons in the impugned order.
Analysis: The petitioner, a private limited company engaged in manufacturing, sought relief through a writ petition under Article 227 to quash a recovery notice and a summary order issued under GST laws. The petitioner alleged discrepancies in Input Tax Credit (ITC) between GSTR-3B and GSTR-2A, leading to a demand for recovery amounting to INR 3,76,17,905. The petitioner contended that the recovery notice lacked a detailed speaking order and only a summary order was available, which did not provide reasons for the decision. The petitioner highlighted that no show cause notice was served before the issuance of the impugned order, raising procedural irregularities.
The High Court observed that the impugned summary order, issued without a formal notice in Form DRC-01 as required by GST Rules, was procedurally flawed. The court noted that the respondent authorities did not provide any opportunity of hearing or reasons for their decision before issuing the impugned order. Consequently, the court held that the summary order dated 11.01.2019 needed to be quashed and set aside. The matter was remanded back to the respondents for fresh adjudication after following the prescribed procedure, including providing the petitioner with a proper opportunity of being heard.
The court clarified that its decision to set aside the impugned order was based on procedural grounds and did not delve into the merits of the case. The court emphasized that any future adjudication process, following the issuance of a show cause notice, would be conducted on the merits of the case. The court directed the respondents to complete the fresh adjudication within 12 weeks from the date of receipt of the court's order. Ultimately, the petition was disposed of, with the rule made absolute to the extent of quashing the summary order, and no costs were awarded in the matter.
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