Suhel Ahmed And Anr vs. The Union Of INDIA And Ors

Held

The Court held that the Summary of the Show Cause Notice (GST DRC-01) does not substitute for a proper SCN required under Section 73(1) of the CGST and State GST Acts. A formal, duly authenticated SCN is mandatory to initiate proceedings under Section 73. The Statement of tax determination attached to the summary cannot be treated as a valid SCN. Furthermore, the Court found that the SCN, Statement, and final Order under Section 73(9) must be issued and passed by the Proper Officer and properly authenticated according to Rule 26(3) of the CGST Rules, 2017. The summaries (DRC-01, DRC-07) are supplementary and cannot replace primary authenticated documents. The Court also held that the impugned order contravened Section 75(4) of the Act, which mandates a reasonable opportunity of hearing when an adverse decision is contemplated. The Summary of SCN left the fields for personal hearing as 'NA', and proceeding to pass an adverse order without granting a hearing when no reply was filed violated statutory safeguards and principles of natural justice. The impugned order dated 16.04.2024 was set aside. The Court granted liberty to initiate de novo proceedings under Section 73 if deemed appropriate, excluding the period from the issuance of the Summary of SCN to the service of the judgment from the limitation period under Section 73(10).

Facts

The petitioners, Suhel Ahmed and M/s HRD Commercial and Industrial Security Force Pvt Ltd, challenged an order dated 16.04.2024 (GST DRC-07) passed by the Assistant Commissioner of State Tax, Karimganj. This order was passed due to the petitioner's failure to make payment within 30 days of a Summary of Show Cause Notice (GST DRC-01) issued on 16.12.2023 for the tax period April 2018 – March 2019. The petitioners contended that no proper Show Cause Notice (SCN) was attached to the summary, and the attachments to both the DRC-01 and DRC-07 were not authenticated by the Proper Officer's signature. The High Court had previously inquired about the issuance of proper SCNs, to which the respondent authorities provided no positive response.

Key Issues

1. Whether a proper Show Cause Notice (SCN) under Section 73(1) of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Assam Goods and Services Tax Act, 2017 (State Act) was issued prior to the impugned order? 2. Whether the determination of tax attached to the Summary of Show Cause Notice (GST DRC-01) and the Summary of Order (GST DRC-07) can be considered as the SCN and the final order, respectively? 3. Whether the impugned order under Section 73(9) of the State Act is in conformity with Section 75(4) of the State Act and the principles of natural justice? Petitioner's Arguments: The petitioner argued that the attachment to GST DRC-01 was not a valid SCN as it did not require the petitioner to show cause. They further contended that the attachments lacked the Proper Officer's signature, violating Rule 26 of the CGST Rules, 2017, which mandates authentication by digital or e-signature. Reliance was placed on judgments from the Telangana, Andhra Pradesh, Jharkhand, and Karnataka High Courts. Additionally, the petitioner argued that Section 75(4) mandates an opportunity of hearing when an adverse decision is contemplated, irrespective of a written request, citing a Chhattisgarh High Court judgment. Revenue's Arguments: The respondent authorities submitted that the Summary of Show Cause Notice (GST DRC-01) accompanied by the determination of tax provided sufficient details for the petitioner to reply. They conceded that there was no separate SCN apart from the determination of tax. Regarding signatures, they stated that the materials did not show explicit signatures but mentioned 'Sd- Proper Officer' and argued that the portal authentication with digital signatures ensures validity.