TaxTMI 
TaxTMI 
2022 (7) TMI 814
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....e being decided by this common judgment. 2. Writ petitioners have prayed for quashing of the summary of show-cause notice issued in Form GST DRC-01 by the respondent State Tax Officer on the ground that the summary of show-cause notice has pre-judged and pre-decided the entire issue and has in fact fastened the liability towards tax, interest and penalty upon the individual petitioners. The petitioners in their individual writ petitions have also sought for quashing of the adjudication order passed under Section 74(9) of the Jharkhand Goods and Services Tax Act, 2017 (hereinafter referred to as 'JGST Act' for short) on the ground that without granting any opportunity of hearing, tax, interest and penalty has been fastened upon the petitioners in a pre-judged and pre-decided manner. Petitioners have also challenged the consequential Demand Notices dated 25.02.2020 issued in Form GST DRC-07 wherein the demand of tax, interest and penalty has been levied. 3. Petitioners contend that no proper show-cause notice has been issued in terms of Section 74(1) of the JGST Act read with Rule 142 of the JGST Rules, 2017. The petitioners allege that the show-cause notices do not even indicate a....
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....efore were under a bonafide belief that the authority was satisfied with the documents and such accounts produced at the time of inspection and no further proceedings would be undertaken. However, to their surprise, a summary of show-cause notice was issued bearing separate reference number of the same date or of different date in case of some of the petitioners. A perusal of this summary of show cause notice issued in Form GST DRC-01 under Rule 142(1) of the JGST Rules would show that the respondent State Tax Officer has, in fact, come to a finding that input tax credit has been wrongly availed or utilized by reason or fraud or any willful misstatement or suppression of fact and therefore individual petitioners are liable for tax, interest under Section 50 of the Act and penalty as well furnished in the form of a chart. None of the show-cause notices bore any date of hearing. Petitioners did not get any opportunity to file their reply nor was any proper show-cause notice issued under Section 74(1) of the Act. The respondent Deputy Commissioner of State Tax of concerned circle has straightaway passed the adjudication order under Section 74(9) in the case of individual petitioners a....
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....d. Vrs. Union of India & Ors. [W.P.(T) No.4241 of 2018] judgment dated 16th April 2019 in support of the same proposition. Learned counsel for the petitioners submits that in terms of Section 74 Sub-section (2) and Subsection (10), any fresh proceedings shall not be barred by limitation even in some of the present cases where the tax period relates to 2017-18. The cut-off date for initiation of proceeding i.e., 5 years would expire six months prior to the time limit specified in Sub-section 10 for issuance of an order i.e. 31st December 2023. Learned counsel for the petitioners has also placed Section 75(3) of the Act which provides that if an order is required to be issued in pursuance of the direction of the appellate authority or appellate tribunal or a court, such order shall be issued within two years from the date of communication of the said direction. Thus, it is submitted that the initiation of fresh proceedings with a proper show-cause notice would not be barred in time if the matter is remanded to the respondent authorities. Learned counsel for the petitioners has submitted that in terms of the previous order passed by this Court, the State has produced the compilation o....
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....e petitioner firm which was duly received by him. The inspection report made out a prima-facie case of bill trading / circular transaction in case of the individual petitioners who were asked to produce the documents in this regard. It appeared from the documents made available by the petitioners that the transactions were not supported by proper e-way bills. There were apparent discrepancies in the returns filed by the petitioners in Form GSTR- 2A, GSTR-1 and GSTR-3B which showed sham/circular transactions with few dealers. The inward supply and outward supply were shown to have been made with the same dealer/person. Time was granted to the individual petitioners on their request to produce the documents with intimation as to why proceedings under Section 73/74 of the JGST Act be not initiated. On the basis of the facts determined in course of inspection, a summary of show-cause notice was issued to individual petitioners under Section 74(1) of the JGST Act, 2017 relating to the relevant tax periods specifying the amount of tax, interest and penalty payable by the petitioners. Section 74(1) of the JGST Act, 2017 empowers the proper officer to issue show-cause notice in the case of....
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....ut by the petitioners in initiation and conduct of the proceedings leading up to the adjudication order which has confirmed the tax, penalty and interest indicated in each of the show-cause notice in its totality without any variation. Learned A.A.G.-II however submits that in case the impugned show-cause notice and adjudication order and the demand notices are set aside, the matter may be remanded to the competent State Tax Officer to initiate fresh proceeding for the relevant tax period in accordance with law and take a fresh decision. Learned counsel for the State also agrees to the contentions of the petitioners that any initiation of fresh proceeding upon remand would not be hit by limitation in view of the specific provisions of Section 74(2) read with Section 74(10) and 75(3) of the JGST Act, 2017. Learned counsel for the State is not in a position to refute the maintainability of the writ petitions on the grounds of violation of principles of natural justice and the procedure prescribed in law under the JGST Act in conduct of the impugned proceedings. 9. Learned counsel for the CGST has filed counter affidavit in W.P.(T) Nos. 3153 of 2020, 3154 of 2020 and 3179 of 2020. In....
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....o M/s Sri Sai Enterprises 8.9.2018 (An-6, Pg.59) ASMT-10 issued on 28.1.2020 (An-2, Pg45) 1.9.2020 (An-3, Pg46) 16.09.2020/20 .10.2020 (Part of An-5, Pg-52 to 57) 20.10.2020 (An-5/1, pg 58) WPT No. 1067/2021 M/s Mahaveer Steel Industries 2018-19 (related to M/s SG Enterprises Common (An-6, Pg.57) ASMT-10 issued on 11.3.2020 (An-2, Pg45) 1.9.2020 (An-3, Pg47) 16.09.2020/20 .10.2020 (Part of An-5, Pg-54 to 55) 20.10.2020 (An-5/1, Pg 56) WPT No. 1082/2021 M/s Mahaveer Steel Industries 2019-20 (related to M/s SG Enterprises Common (An-6, Pg.52) ASMT-10 issued on 11.3.2020 (An-2, Pg42) 1.9.2020 (An-3, Pg-43) 16.09.2020/ 02.12.2020 (Part of An-5, Pg-49 to 50) 02.12.2020 (An-5/1, Pg 51) WPT No. 1083/2021 M/s Mahaveer Steel Industries 2017-18 (related to M/s SG Enterprises Common (An-6, Pg.54) ASMT-10 dated 11.3.2020 (An-2, Pg44) 1.9.2020 (An-3, Pg-45) 16.09.2020/ 20.10.2020 (Part of An-5, Pg- 50 to 52) 20.10.2020 (An-5/1, Pg 53) 11. The pleadings in the case of individual writ petitioners and the documents enclosed thereto, as referred to above, show that the adjudication proceedings in each case were based upon inspection undertaken on the basis of the intel....
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....kas Services Private Limited (supra). The opinion of this Court contained in paragraphs 14 to 18 are being extracted hereunder :- "14. A bare perusal of the impugned show-case notice creates a clear impression that it is a notice issued in a format without even striking out any irrelevant portions and without stating the contraventions committed by the petitioner whether actuated by reason of fraud or any willful misstatement or suppression of facts in order to evade tax. Needless to say that the proceedings under Section 74 have a serious connotation as they allege punitive consequences on account of fraud or any willful misstatement or suppression of facts employed by the person chargeable with tax. In absence of clear charges which the person so alleged is required to answer, the noticee is bound to be denied proper opportunity to defend itself. This would entail violation of principles of natural justice which is a well-recognized exception for invocation of writ jurisdiction despite availability of alternative remedy. In this regard, it is profitable to quote the opinion of the Apex Court in the case of Oryx Fisheries P. Ltd. (supra) at para 24 to 27 wherein the opinion of t....
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....leaded so that it is clear and explicit to the noticee to reply thereto effectively [See Larsen & Toubro Ltd. Vs. CCE, (2007) 9 SCC 617 (para 14)]. Further in the case of CCE Vs. Brindavan Beverages (P) Ltd. reported in (2007) 5 SCC 388 relied upon by the petitioner, the Apex Court at para-14 of the judgment has held that if the allegations in the show-cause notice are not specific and are on the contrary, vague, lack details and/or unintelligible i.e. sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the showcause notice. We do not agree with the contention of the respondent that the notice ought not to be struck down if in substance it contains the matters which a notice must contain. In order to proceed under the provisions of Section 74 of the Act, the specific ingredients enumerated thereunder have to be clearly asserted in the notice so that the noticee has an opportunity to explain and defend himself. 17. As observed herein above, the impugned notice completely lacks in fulfilling the ingredients of a proper showcause notice under Section 74 of the Act. Proceedings under Section 74 of the Act have to be preceded by a ....
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....sions relating to determination of tax (4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. (5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing: PROVIDED that no such adjournment shall be granted for more than three times to a person during the proceedings." 22. A conjoint reading of the provisions of Sections 75(4) and 75(5) would reveal as under:- (i) Opportunity of hearing' shall be granted on request. (ii) Opportunity of hearing shall be granted where any adverse decision is contemplated. (iv) If sufficient cause is shown, the proper officer can adjourn the hearing for reasons to be recorded in writing. (v) However, no such adjournment shall be granted for more than three times during the proceedings. 23. From the facts of the present proceedings, it would transpire that on 14th March, 2020, Form GST DRC 01 was issued without specifying any date of hearing and, thereafter, straightaway, an Adjudic....
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....elating to tax period 2018-19 and the adjudication order at Annexure-4 under Section 74(9) of the Act bearing Ref. No.46 dated 25th February 2020 in the case of the petitioner M/s Jai Jawan Kastha Bhandar i.e. W.P.(T) No.3153 of 2020 are reproduced hereunder :- 17. The summary of the order in Form GST DRC 07 has been issued in individual cases conveying the assessment of liability towards tax, interest and penalty adjudged by the State Tax Officer on wrongful availment of ITC without receipt of goods in contravention of Section 16(2) using fraudulent methods in case of individual petitioners in like manner. It is evident that without proper opportunity of furnishing reply to the show-cause notice and without supplying the relied upon documents referred to in the inspection report, the petitioners have been prejudiced in defending themselves. The petitioners may have also lost the opportunity to cross-examine such persons as are relied upon by the tax authorities to support the impugned proceedings. Since the impugned proceedings are clearly in violation of principles of natural justice and the procedure prescribed under the JGST Act, the petitioners are justified in approaching th....