Ms/ Merle Construction And Marketing PVT LTD vs. The State Of Assam And Ors

Facts

The petitioner, MS/ MERLE CONSTRUCTION AND MARKETING PVT LTD, is challenging an order dated 24.02.2025 passed by the Assistant Commissioner of State Tax, Goalpara (Respondent No. 3). The petitioner contends that this order was passed without issuing a show cause notice under Section 73(1) of the CGST Act, 2017, and without providing an opportunity for a hearing. The petitioner sought a hearing, but the summary of the order was issued without granting it. Both parties agreed that this case involves a similar issue to a previous judgment by a Coordinate Bench in WP(C) No. 3912/2024 (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 a Show Cause Notice required under Section 73(1) of the CGST Act, 2017, and the State Act. It was clarified that the Proper Officer must issue a Show Cause Notice to initiate proceedings under Section 73. Furthermore, the Statement of determination of tax under Section 73(3) cannot be confused with or substitute the Show Cause Notice under Section 73(1). The Court found that the initiation of proceedings under Section 73 without a proper Show Cause Notice is bad in law. Additionally, the impugned orders were found to be in violation of Section 75(4) as no opportunity of hearing was provided. Consequently, the impugned order dated 24.02.2025 and the summary of show cause notice dated 28.11.2024 were set aside and quashed. 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 of show cause notices to the date of service of the judgment for computing the period prescribed under Section 73(10).

Key Issues

1. Whether the Summary of the Show Cause Notice in GST DRC-01, issued under Section 73(1) of the CGST Act, 2017, can substitute for a proper Show Cause Notice required to initiate proceedings under Section 73 of the Act. 2. Whether the Statement of determination of tax, issued under Section 73(3) of the CGST Act, 2017, can substitute for the Show Cause Notice required under Section 73(1). 3. Whether the impugned order, passed without issuing a proper Show Cause Notice and without providing an opportunity of hearing, violates Section 73 and Section 75(4) of the CGST Act, 2017. Petitioner's Arguments: The petitioner argued that the order passed by the Assistant Commissioner of State Tax was illegal as it was issued without a proper show cause notice under Section 73(1) and without an opportunity of hearing, thereby violating statutory provisions. They relied on the principles laid down in the judgment of Construction Catalysers Pvt. Ltd. (supra). Revenue's Arguments: The respondent authorities did not present separate arguments but agreed that the issue was similar to the Construction Catalysers Pvt. Ltd. case and that the determination made therein should cover the present case.