Dihingia Motors PVT. LTD. vs. The Union Of INDIA And 4 Ors

Held

The Court held that the attachment to the Summary of Show Cause Notice (GST DRC-01), which contained the determination of tax, did not substitute for a proper Show Cause Notice required under Section 73(1) of the Central and State Acts. The Court found that the Statement of Determination of Tax under Section 73(3) cannot be confused with or replace the Show Cause Notice under Section 73(1). Furthermore, the Court held that the impugned order dated 30.12.2023 was in violation of Section 75(4) of the CGST/AGST Act, 2017, as no opportunity of hearing was provided to the petitioner, despite the petitioner having indicated an option for personal hearing. The Court also noted that the Show Cause Notice, Statement, and Order are required to be authenticated as per Rule 26(3) of the Rules of 2017. The ratio decidendi is that statutory mandates for issuing a proper Show Cause Notice and providing an opportunity of hearing must be strictly adhered to, and procedural deficiencies, such as unsigned documents or lack of hearing, render proceedings bad in law. The impugned order was set aside and quashed, with liberty granted to the respondent authorities to initiate de novo proceedings if deemed fit, and the period from the issuance of the Summary of Show Cause Notice to the service of the judgment was excluded for computing the time limit for passing orders.

Facts

The petitioner, Dihingia Motors Pvt. Ltd., received a Summary of Show Cause Notice (GST DRC-01) dated 30.09.2023, which stated that a Show Cause Notice was attached. However, the petitioner claims no actual Show Cause Notice was attached, only a determination of tax. Consequently, the petitioner did not reply. A Summary of Order (GST DRC-07) dated 30.12.2023 was then issued, stating the petitioner agreed with the notice due to non-response. Both the attachment to DRC-01 and DRC-07 lacked the signature of the Proper Officer. The petitioner's grievance is that they were not afforded an opportunity of hearing as required by Section 75(4) of the CGST/AGST Act, 2017, leading to this writ petition.

Key Issues

1. Whether the attachment to the Summary of Show Cause Notice (GST DRC-01), which contained the determination of tax, constitutes a valid Show Cause Notice as mandated by Section 73(1) of the Central and State Goods and Services Tax Acts and the Rules framed thereunder? The petitioner argued that the attachment was merely a determination of tax and not a Show Cause Notice, lacking the requirement to show cause and the signature of the Proper Officer, citing judgments from the Telangana, Andhra Pradesh, and Jharkhand High Courts. The revenue contended that the determination of tax provided sufficient details for the petitioner to reply and that the 'Sd- Proper Officer' notation, along with portal authentication, sufficed. 2. Whether the impugned order dated 30.12.2023 is sustainable in light of the absence of an opportunity of hearing provided to the petitioner, in violation of Section 75(4) of the CGST/AGST Act, 2017? The petitioner argued that principles of natural justice and statutory mandate were violated. The revenue did not appear to contest this point directly, but their submission regarding the sufficiency of the determination of tax implied a belief that a hearing was not necessary if no reply was filed.