M/S Assam Enterprise And Anr vs. The State Of Assam And 2 Ors.

Facts

The petitioner, M/s Assam Enterprise and its proprietor Sri Bitu Paul, challenged an order dated 27.02.2025 and a summary of show cause notice dated 26.11.2024 issued by the Assistant Commissioner of State Taxes, Unit-Dhemaji. The petitioner contended that the summary of show cause notice was issued without a proper order under Section 73(1) of the AGST Act, 2017, and that an order was passed without providing an opportunity for a hearing. Both parties agreed that the issue was identical to a previous case, Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others, decided by a Co-ordinate Bench on 26.09.2024.

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 Show Cause Notice to initiate proceedings under Section 73. The Statement of determination of tax under Section 73(3) also cannot substitute for the Show Cause Notice. Proceedings initiated under Section 73 without a proper Show Cause Notice are bad in law. Furthermore, the Court found 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 excluded the period from the issuance of the summary show cause notices until the certified copy of the judgment is served upon the Proper Officer for computing the time limit prescribed for passing an order under Section 73(10).

Key Issues

1. Whether the Summary of Show Cause Notice in GST DRC-01, issued by the Proper Officer, can substitute for a Show Cause Notice required under Section 73(1) of the Central and State Acts, and whether the attachment to it, being a Statement of determination of tax under Section 73(3), can fulfill the requirement of a Show Cause Notice. The petitioner argued that the issuance of a summary notice without a proper show cause notice and without an opportunity of hearing renders the proceedings bad in law. The respondent authorities, as indicated by the Court's observation in the cited precedent, were under the impression that the attachment of the determination of tax constituted a valid show cause notice. 2. Whether the impugned order dated 27.02.2025, passed without granting an opportunity of hearing, violates Section 75(4) of the Act.