Tax order quashed for relying only on Form GST DRC-01 summary, violating Section 73(1) and Rule 142

HC held that issuance of only a Summary of Show Cause Notice in Form GST DRC-01, without a proper and prior Show Cause Notice under Section 73(1) AGST Act read with Rule 142(1)(a), violated principles of natural justice and mandatory statutory requirements. A summary was held not to be a substitute for the substantive notice required to initiate proceedings. As compliance with Section 73(1)-(8), (10)-(11) and Rule 142(1) is a condition precedent for a valid order under Section 73(9), the impugned tax determination order dated 25.02.2025 was quashed, and the petition was disposed of.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether issuance only of a Summary of Show Cause Notice in Form GST DRC-01 along with an attachment titled "Attachment to Determination of Tax" (treated as a statement under Section 73(3)) without a separate, prior and proper Show Cause Notice under Section 73(1) of the Assam Goods and Services Tax Act, 2017, validly initiates proceedings under Section 73.

1.2 Whether an order passed under Section 73(9) of the Assam Goods and Services Tax Act, 2017, based solely on such Summary of Show Cause Notice and attachment, is sustainable in law, and what consequential directions should follow.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of initiation of proceedings under Section 73 based only on Summary of Show Cause Notice and attachment

Legal framework

2.1 The Court considered Section 73 of the Central Goods and Services Tax Act, 2017 (pari materia with Section 73 of the State Act) and Rule 142(1) of the Central Goods and Services Tax Rules, 2017 (pari materia with Rule 142(1) of the State Rules). Section 73(1) mandates service of a notice on the person chargeable with tax, requiring him to show cause. Rule 142(1)(a) requires the proper officer to serve, along with such notice, a summary thereof electronically in Form GST DRC-01.

2.2 The Court relied on a prior common judgment in a batch of writ petitions wherein it had held, inter alia, that: (a) the Summary of Show Cause Notice in GST DRC-01 is not a substitute for the Show Cause Notice required under Section 73(1); and (b) the attachment to the Summary of Show Cause Notice in GST DRC-01, being only a "Statement of determination of tax" under Section 73(3), cannot substitute the mandatory Show Cause Notice under Section 73(1).

Interpretation and reasoning

2.3 It was undisputed before the Court that, in the present matter, there existed (i) an "Attachment to Determination of Tax" (treated as a statement under Section 73(3)), and (ii) a Summary of Show Cause Notice in Form GST DRC-01, but no prior, separate, and proper Show Cause Notice as contemplated under Section 73(1) of the State Act.

2.4 The Court reiterated that under Section 73: (i) the Show Cause Notice under Section 73(1), (ii) the statement under Section 73(3), and (iii) the order under Section 73(9), all have to be issued by the "proper officer," and that compliance with sub-sections (1) to (8), (10) and (11) of Section 73 and with Rule 142(1) is a condition precedent for a valid order under Section 73(9).

2.5 Applying the reasoning of the earlier common judgment, the Court held that issuance of only a Summary of Show Cause Notice in Form GST DRC-01 and a statement of determination of tax under Section 73(3) does not amount to issuance of a proper and prior Show Cause Notice under Section 73(1). A Summary in GST DRC-01 cannot substitute the substantive Show Cause Notice that sets the proceedings under Section 73 in motion.

Conclusions

2.6 Non-issuance of a proper and prior Show Cause Notice under Section 73(1) of the State Act, and issuance only of a Summary of Show Cause Notice in Form GST DRC-01 and an attachment to determination of tax, is not in compliance with Section 73(1) and Rule 142(1). Initiation of proceedings under Section 73 on this basis is invalid in law.

Issue 2 - Sustainability of the order under Section 73(9) and consequential directions

Interpretation and reasoning

2.7 Since a valid Show Cause Notice under Section 73(1) is a jurisdictional and procedural precondition for a lawful order under Section 73(9), and such notice was not issued, the impugned order was vitiated.

2.8 In view of this foundational defect, the Court considered it unnecessary to examine other grounds raised in the writ petition.

2.9 Following the directions in paragraph 29(F) of the earlier common judgment, the Court held that, though the impugned order is liable to be quashed on account of these procedural and technical infirmities, the revenue authorities may, in the interest of justice, be permitted to initiate de novo proceedings under Section 73, subject to statutory requirements and time limits, with appropriate exclusion of time as already directed in that earlier judgment.

Conclusions

2.10 The order passed under Section 73(9), having been made without a proper and prior Show Cause Notice under Section 73(1), is not sustainable in law and is set aside and quashed.

2.11 It is open to the authorities to proceed afresh in accordance with Section 73(1) of the State Act, by issuing a valid Show Cause Notice and complying with ancillary legal provisions, subject to the observations and time-exclusion directions contained in paragraph 29(F) of the earlier common judgment.

2.12 In any such de novo proceedings, the petitioner is at liberty to raise all grounds available in law.

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