M/S Unnati Motors vs. The State Of Assam

Facts

The petitioner, M/s Unnati Motors, filed a writ petition before the Gauhati High Court challenging the actions of the Assistant Commissioner of State Tax. The petitioner contended that the Assistant Commissioner issued a summary of show cause notice dated 08.12.2023 without first issuing a proper show cause notice under Section 73(1) of the CGST Act, 2017. Furthermore, the petitioner argued that a summary of order dated 30.04.2024 was issued without passing a formal order under Section 73(9) of the CGST Act, 2017. The petitioner also claimed that an opportunity of hearing was denied. The respondents are the State of Assam, represented by the Commissioner and Secretary, Department of Finance and Taxation, the Principal Commissioner of State Tax, and the Assistant Commissioner of State Tax.

Held

The Court held that the Summary of the Show Cause Notice (GST DRC-01) is not a substitute for a Show Cause Notice required under Section 73(1) of the CGST Act and the State Act. Similarly, the Statement of determination of tax attached to the summary cannot replace the mandatory Show Cause Notice. The Court found that the initiation of proceedings under Section 73 without a proper Show Cause Notice is bad in law. Additionally, 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 excluded the period from the issuance of the summary show cause notice until 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 can substitute a Show Cause Notice issued in terms of Section 73(1) of the CGST Act, 2017 and the State Act? 2. Whether the Summary of the Statement of determination of tax, attached to the Summary of Show Cause Notice, can substitute the requirement for issuance of a Show Cause Notice under Section 73(1)? 3. Whether the impugned orders are in violation of Section 75(4) of the CGST Act, 2017, due to the denial of an opportunity of hearing? The petitioner argued that the issuance of summaries instead of proper notices and orders, and the denial of a hearing, rendered the proceedings bad in law. The revenue (State of Assam) did not record any specific arguments but agreed that the issue was similar to a previously decided case, Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others, and that the determination in that case should cover the present petition.