Ranjit Dutta vs. The Union Of INDIA And 6 Ors.

Facts

The petitioner, Ranjit Dutta, challenged a summary of order dated April 4, 2024, issued by Respondent No. 3 (Goods and Services Tax Council). The petitioner contended that this summary of order was passed without adhering to the procedure prescribed under Section 73 of the CGST Act, 2017, and without providing an opportunity for a hearing. The petitioner initially challenged a notice dated December 28, 2023, but later stated they would not press that challenge. The core of the petitioner's grievance was the alleged procedural irregularity in the issuance of the summary of order.

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 CGST Act and the State Act. The Proper Officer must issue a formal Show Cause Notice to initiate proceedings. Similarly, the Statement of Determination of Tax under Section 73(3) cannot substitute the requirement for a Show Cause Notice. Proceedings initiated under Section 73 without a proper Show Cause Notice are bad in law. The Court also noted that the impugned orders violated Section 75(4) as no opportunity of hearing was granted. Consequently, the impugned orders were set aside and quashed. 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 of Show Cause Notices until the judgment is served on the Proper Officer, for computing the time limit under Section 73(10).

Key Issues

1. Whether the Summary of Show Cause Notice in GST DRC-01, when attached with the Statement of Determination of Tax, can substitute a proper Show Cause Notice required under Section 73(1) of the CGST Act, 2017 and the State Act? 2. Whether the issuance of a Summary of Show Cause Notice, Summary of Statement of Determination of Tax, and Summary of Order, without a proper Show Cause Notice, Statement, and Order authenticated as per Rule 26(3) of the Rules of 2017, is legally valid under Section 73 of the CGST Act, 2017 and the State Act? 3. Whether the impugned order, passed without providing an opportunity of hearing, violates Section 75(4) of the CGST Act, 2017? Petitioner's Arguments: The petitioner argued that the summary of order was issued without adhering to the mandatory procedure under Section 73 of the CGST Act, 2017, and that no opportunity of hearing was provided. They relied on the principle that procedural fairness must be observed. Revenue's Arguments: The judgment records that both learned counsels for the parties submitted that a similar issue was dealt with in a previous judgment (Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others). Therefore, the revenue's stance appears to be aligned with applying the precedent.