Biswa Ranjan Borah vs. The State Of Assam And 2 Ors.

Facts

The petitioner, Biswa Ranjan Borah, challenged the actions of the Assistant Commissioner of State Tax, Guwahati. The petitioner contended that the Assistant Commissioner issued a summary of show cause notice dated 20.05.2024 and a summary of order dated 30.08.2024 without first 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 stated that an opportunity for a hearing was sought but not provided before the summary of order was issued. The respondents, represented by the State of Assam and its tax authorities, acknowledged that a summary of show cause notice was issued but admitted that no show cause notice in terms of Section 73(1) was issued.

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. It was emphasized that the Proper Officer must issue a formal Show Cause Notice to initiate proceedings under Section 73. Similarly, a 'Statement of the determination of tax' cannot substitute the requirement of a Show Cause Notice. The Court found that the initiation of proceedings and passing of orders without a proper Show Cause Notice and without providing an opportunity of hearing, as mandated by Section 73 and Section 75(4) respectively, are bad in law. The Court relied on its previous judgment in Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others. Consequently, the impugned summary of show cause notice and summary of order were set aside. 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 notices until the judgment's service be excluded for computing the period prescribed 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 of the Act? 2. Whether a 'Statement of determination of tax' attached to a Summary of Show Cause Notice can substitute the requirement for a formal Show Cause Notice under Section 73(1) of the CGST Act, 2017? 3. Whether the issuance of a 'Summary of Order' under Section 73(9) of the CGST Act, 2017, without passing a proper order and without providing an opportunity of hearing, is legally sustainable? Petitioner's Arguments: The petitioner argued that the authorities failed to follow the mandatory procedure prescribed under Section 73 of the CGST Act by issuing summaries instead of formal notices and orders, and by denying an opportunity of hearing. The petitioner relied on the principles of natural justice and statutory compliance. Revenue's Arguments: The respondents, through their affidavit, admitted that no formal show cause notice under Section 73(1) was issued, but indicated that a summary of show cause notice was provided. They did not present arguments against the petitioner's claims regarding the procedural deficiencies.