Aman Gupta vs. The Union Of INDIA And Ors

Facts

The petitioner, Aman Gupta, representing NES Refractories LLP, challenged the summary of show cause notice dated 29.11.2024 and the subsequent order dated 28.02.2025 issued by the Assistant Commissioner of State Tax, Guwahati. The petitioner contended that these were issued without a proper show cause notice under Section 73(1) of the AGST Act, 2017, and without providing an opportunity for a hearing. The respondents are the Union of India, the State of Assam, the Commissioner of Taxes, and the Assistant Commissioner of State Tax. The parties agreed that the issue was identical to a previous case, Construction Catalysers Pvt. Ltd. Vs. the State of Assam and others (WP(C) No. 3912/2024), decided by a Co-ordinate Bench.

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. Furthermore, a Statement of Determination of Tax under Section 73(3) cannot substitute the mandatory Show Cause Notice under Section 73(1). Proceedings initiated under Section 73 without a proper Show Cause Notice are bad in law. The Court also noted that the issuance of summaries (DRC-01, DRC-02, DRC-07) does not dispense with the requirement of issuing proper Show Cause Notices, Statements, and Orders as per Section 73, and these documents must be authenticated as per Rule 26(3) of the Rules of 2017. The impugned orders were found to be in violation of Section 75(4) for not providing an opportunity of hearing. Consequently, the impugned orders were set aside. The Court granted liberty to the respondent authorities to initiate de novo proceedings under Section 73 if deemed fit, excluding the period from the issuance of the summary show cause notice to the service of the judgment for computing the time limit under Section 73(10).

Key Issues

1. Whether the Summary of Show Cause Notice in GST DRC-01, issued under Section 73(1) of the Central/State Act, is a substitute for a proper Show Cause Notice required by Section 73(1)? 2. Whether a Statement of Determination of Tax, issued under Section 73(3) of the Central/State Act, can substitute the requirement for a Show Cause Notice under Section 73(1)? 3. Whether proceedings initiated under Section 73 of the Central/State Act without a proper Show Cause Notice are legally valid? 4. Whether the issuance of a Summary of Show Cause Notice, Summary of Statement, and Summary of Order dispenses with the requirement of issuing a proper Show Cause Notice, Statement, and passing an Order as mandated by Section 73, and if these documents require authentication under Rule 26(3) of the Rules of 2017? 5. Whether the impugned orders are in violation of Section 75(4) of the Central/State Act due to the absence of an opportunity of hearing? Petitioner's Arguments: The petitioner argued that the summary of show cause notice and the subsequent order were issued without a proper show cause notice under Section 73(1) and without granting an opportunity of hearing, making the proceedings bad in law. They relied on the principles laid down in Construction Catalysers Pvt. Ltd. (supra). Revenue's Arguments: The judgment records that both learned counsels agreed that the issue was similar to Construction Catalysers Pvt. Ltd. (supra) and that the determination in that case should cover the present petition. No specific arguments were recorded for the revenue beyond this agreement.