Dhaneswar Kalita vs. The State Of Assam And 2 Ors.

Held

The Court held that the Summary of Show Cause Notice in GST DRC-01, even with an attached determination of tax, cannot substitute for a proper Show Cause Notice required under Section 73(1) of the CGST/AGST Act, 2017. The attachment was identified as a statement of tax determination under Section 73(3) and not the mandatory notice under Section 73(1). The Court found that initiating proceedings without a proper Show Cause Notice is bad in law. Furthermore, the Court held that the impugned order violated Section 75(4) of the Act, as no opportunity of hearing was provided to the petitioner, despite the petitioner having indicated a preference for a personal hearing. The Court noted that the attachments to both GST DRC-01 and GST DRC-07 lacked the signature of the Proper Officer, which is required under Rule 26(3). The Court quashed the impugned order dated 23.04.2024 and granted liberty to the revenue to initiate de novo proceedings under Section 73, excluding the period from the issuance of the Summary of Show Cause Notice until the judgment's service.

Facts

The petitioner, Dhaneswar Kalita, received a Summary of Show Cause Notice (GST DRC-01) dated 11.12.2023, which was accompanied by an attachment detailing the determination of tax. The petitioner did not reply, as no separate Show Cause Notice was attached. Subsequently, an Order dated 23.04.2024 (GST DRC-07) was issued, stating that the petitioner had agreed with the notice's terms due to non-response. The petitioner's grievance is that neither the Summary of Show Cause Notice nor the final order contained the signature of the Proper Officer, and they were not afforded an opportunity of hearing as mandated by Section 75(4) of the CGST/AGST Act, 2017. The writ petition was filed challenging these actions by the State Tax authorities.

Key Issues

1. Whether the attachment to the Summary of Show Cause Notice (GST DRC-01), which contained the determination of tax, constituted a valid Show Cause Notice as required by Section 73(1) of the CGST/AGST Act, 2017 and Rule 142 of the CGST Rules, 2017? The petitioner argued that the attachment was merely a statement of tax determination and lacked the explicit requirement to 'show cause', nor did it bear the signature of the Proper Officer, violating Rule 26 of the Rules. They relied on judgments from the Telangana High Court (M/s Silver Oak Villas LLP) and Andhra Pradesh High Court (A.V. Bhanoji Row) regarding unsigned documents. The petitioner also cited the Jharkhand High Court's ruling in Nkas Services Private Limited, holding that a Summary of Show Cause Notice cannot substitute a proper Show Cause Notice. The revenue contended that the attachment provided all necessary details for the petitioner to reply and that the 'Sd- Proper Officer' notation, coupled with portal authentication, sufficed. They did not present arguments against the lack of signature.