Phanidhar Borsaikia vs. The State Of Assam And 2 Ors.

Facts

The petitioner, Phanidhar Borsaikia, challenged the actions of the Assistant Commissioner of State Tax, Dhemaji. The petitioner contended that the Assistant Commissioner issued a summary of show cause notice dated 08.05.2024 and a summary of order dated 30.08.2024 without issuing a proper show cause notice under Section 73(1) of the CGST Act, 2017, and without passing a formal order under Section 73(9) of the CGST Act, 2017. The petitioner further argued that an opportunity of hearing was denied. The respondents admitted that a summary of show cause notice was issued, but not a show cause notice in terms of Section 73(1). Both parties agreed that the issue was identical to a previous case, Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others.

Held

The Court held that the 'Summary of the Show Cause Notice' in GST DRC-01 is not a substitute for the Show Cause Notice required under Section 73(1) of the Central and State Acts. The Proper Officer must issue a formal Show Cause Notice to initiate proceedings under Section 73. Similarly, the 'Statement of the determination of tax' cannot substitute the Show Cause Notice. The Court found that the initiation of proceedings under Section 73 without a proper Show Cause Notice was bad in law. Furthermore, the Court noted that the impugned orders violated Section 75(4) as no opportunity of hearing was provided. Consequently, the impugned orders were set aside and quashed. In the interest of justice, the Court granted liberty to the respondent authorities to initiate de novo proceedings under Section 73 if deemed fit, and directed that the period from the issuance of the summary show cause notices until the service of the judgment be excluded for computing the period prescribed for passing an order under Section 73(10).

Key Issues

1. Whether the issuance of a 'Summary of Show Cause Notice' in GST DRC-01, without a formal Show Cause Notice under Section 73(1) of the CGST Act, 2017, is legally valid for initiating proceedings under Section 73? 2. Whether a 'Statement of determination of tax' attached to a Summary of Show Cause Notice, can substitute the requirement of a Show Cause Notice under Section 73(1) of the CGST Act, 2017? 3. Whether the issuance of a 'Summary of Order' without a formal order under Section 73(9) of the CGST Act, 2017, and without providing an opportunity of hearing, is in violation of Section 75(4) of the CGST Act, 2017? The petitioner argued that the summary notices and orders were not substitutes for the statutory requirements of a proper show cause notice, statement of determination, and formal order, and that the lack of a hearing rendered the proceedings invalid. The respondents conceded that a formal show cause notice under Section 73(1) was not issued. Both parties relied on the judgment in Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others.