2025 (9) TMI 662 - HC - GST

Challenge dismissed over failure to reply to Form GST DRC-01A; liberty to file reply to DRC-01 within two weeks

M/s. Studieux Construction, a Partnership Firm Rep. by its Partner, Mr. Zaid Ahmed Versus The Assistant Commissioner (ST), Chennai

The HC dismissed the writ petition challenging a subsequent Form GST DRC-01 dated 30.05.2025, holding that the challenge was unsustainable where no reply ... Issuance of notice in Form GST DRC-01A on 11.04.2025 under Section 74(5) of TNGST Act 2017 - without considering the petitioner's detailed reply along with all necessary documents, respondent issued another notice in Form GST DRC- 01 - HELD THAT:- The right course available to the petitioner is, to file a reply for the notice in Form GST DRC-01 dated 30.05.2025. However, without filing any reply, challenging the said notice is not sustainable and this Court does not find any force in the demand raised by the petitioner. This writ petition stands dismissed. However, in the interest of justice, this Court is inclined to grant liberty to the petitioner to file a reply for the aforementioned Form GST DRC-01 dated 30.05.2025, within period of two weeks from the date of receipt of a copy of this order. On filing of such reply/objection by the petitioner, the respondent shall consider the same and issue a 14 days clear notice, by fixing the date of personal hearing, to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible. ISSUES PRESENTED AND CONSIDERED 1. Whether issuance of a notice in Form GST DRC-01 after issuance of a prior Form GST DRC-01A (to which a reply and supporting documents were filed) was permissible where the respondent remained unsatisfied with the earlier reply. 2. Whether a writ petition challenging the Form GST DRC-01 is maintainable when the petitioner has not filed any reply/objection to that specific DRC-01 notice. 3. Whether relief in the nature of quashing/restraining further action on the demand can be granted prior to the petitioner exhausting the statutory opportunity to file a reply to the DRC-01 notice and obtain adjudication on merits. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of issuing Form GST DRC-01 after DRC-01A response Legal framework: Section 74(5) of the State GST Act (TNGST Act 2017) and the statutory notice regime under the GST adjudication procedure govern issuance of notices for demand and the manner of seeking explanation/response from the assessee; statutory forms include DRC-01A and DRC-01 for preliminary and detailed demand notices respectively. Precedent Treatment: No prior judicial authorities were invoked in the text; the Court considered the statutory scheme and the parties' contentions. Interpretation and reasoning: The Court noted that a DRC-01A notice was issued and the petitioner filed a reply with documents. The respondent, being unsatisfied with that reply, was entitled under the statutory scheme to issue a further notice in Form DRC-01 calling for a detailed reply. The Court treated the issuance of DRC-01 as a procedural step contemplated by law where the initial response does not satisfy the assessing authority. Ratio vs. Obiter: Ratio - it is permissible to issue a DRC-01 after DRC-01A where the authority is not satisfied with the earlier reply and requires a detailed response; Obiter - none elaborated beyond application to facts. Conclusions: The issuance of the DRC-01 was held to be legally permissible in the circumstances where the respondent remained unsatisfied with the DRC-01A reply. Issue 2: Maintainability of writ challenge to DRC-01 without filing reply Legal framework: Principles of administrative law and statutory notice/response procedure under the GST framework require that an assessee availing statutory remedies and filing replies/objections to statutory notices is ordinarily obliged to pursue those routes before seeking extraordinary writ relief. Precedent Treatment: No specific authorities cited; the Court applied established practice that pre-adjudicatory statutory opportunities should be availed before judicial intervention. Interpretation and reasoning: The Court found that the petitioner had not filed any reply to the DRC-01 dated 30.05.2025 and therefore had not availed the statutory opportunity to place objections or evidence before the authority. The Court reasoned that challenging the DRC-01 without first filing a reply/objection was not sustainable because the appropriate course is to file the reply and await adjudication; if the reply is not considered or is rejected, the petitioner may then challenge the resultant order by the appropriate legal remedies. Ratio vs. Obiter: Ratio - a writ petition challenging a statutory notice is not maintainable where the petitioner has failed to file the required reply/objection to that notice and thereby has not exhausted available statutory remedies; Obiter - procedural guidance about subsequent steps is ancillary but driven by the ratio. Conclusions: The writ petition challenging the DRC-01 was dismissed as unsustainable because the petitioner did not file a reply to that notice. Issue 3: Availability of interim relief prior to filing/responding to DRC-01 and requirement of hearing on merits Legal framework: The Court may grant interim relief in exceptional circumstances, but ordinarily requires that statutory procedures be followed and that parties be afforded an opportunity of hearing before final orders are passed; procedural fairness demands consideration of representations and an opportunity for personal hearing prescribed by the statutory scheme. Precedent Treatment: No specific authorities were relied upon; the Court applied settled principles of opportunity to be heard and expeditious adjudication after reply. Interpretation and reasoning: Rather than grant relief on the challenge to the notice, the Court exercised judicial restraint and provided directed, remedial relief to preserve the petitioner's rights: liberty to file a reply to the DRC-01 within two weeks of receiving the order; obligation on the respondent to consider the reply, issue a clear 14-day notice fixing a personal hearing date, and thereafter pass orders on merits expeditiously and in accordance with law. This approach balances administrative prerogative to issue DRC-01 with the petitioner's right to be heard and to have adjudication on merits. Ratio vs. Obiter: Ratio - where a petitioner has not responded to a statutory notice, the Court will generally dismiss challenge but may grant limited procedural relief (time to respond and direction for hearing) to ensure fair adjudication; Obiter - the specific timelines (two weeks to file reply; 14-day clear notice and personal hearing) are procedural directions in the facts of the case and serve as guidance rather than a broad rule of law. Conclusions: No interim quashing of the notice was granted; instead the Court dismissed the writ petition but granted specific procedural relief: leave to file reply within two weeks, requirement on authority to consider reply, issue 14 days' clear notice fixing a personal hearing, and thereafter pass orders on merits expeditiously and in accordance with law. Cross-References and Practical Directions 1. Issues 1 and 2 are interrelated: authority to issue DRC-01 (Issue 1) is consistent with the requirement that the assesee must respond to that DRC-01 before judicially challenging it (Issue 2). 2. The Court's dismissal of the writ petition is tempered by Issue 3 relief directing the statutory process to be followed with specified timelines, thereby preserving the petitioner's right to be heard and ensuring administrative adjudication on merits prior to further judicial intervention.