The Assam Gramin Vikash Bank (Formerly Known As Langpi Dehangi Rural Bank) vs. The State Of Assam And 2 Ors

Held

The Court held that the Summary of Show Cause Notice in GST DRC-01 is not a substitute for the Show Cause Notice required under Section 73(1) of the Central and State Acts. The Proper Officer must issue a formal Show Cause Notice to initiate proceedings. The attachment to the Summary of Show Cause Notice, which is merely a Statement of tax determination under Section 73(3), cannot substitute the mandatory Show Cause Notice. Therefore, proceedings initiated without a proper Show Cause Notice are bad in law. The Court also found that the Summary of Show Cause Notice, Summary of Statement, and Summary of Order do not dispense with the requirement of issuance of a proper Show Cause Notice, Statement, and Order, which must be authenticated as per Rule 26(3). Furthermore, the impugned orders violated Section 75(4) as no opportunity of hearing was provided. 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, and excluded the period from the issuance of the Summary of Show Cause Notices until the service of the judgment for computing the time limit under Section 73(10).

Facts

A batch of writ petitions were filed before the Gauhati High Court challenging orders passed by the Assistant Commissioner of State Tax, Assam. The petitioners, including Construction Catalysers Private Limited and The Assam Gramin Vikash Bank, received Summary of Show Cause Notices in GST DRC-01, accompanied by attachments detailing tax determination for various periods, including 2017-18 and July 2017-March 2018. The petitioners contended that these attachments were not proper Show Cause Notices and were not authenticated. In some cases, no reply was filed due to the absence of a proper Show Cause Notice on the portal. Subsequently, Summary of Orders in GST DRC-07 were issued, citing unsatisfactory replies or failure to attend personal hearings. The attachments to both DRC-01 and DRC-07 were not authenticated by the Proper Officer.

Key Issues

1. Whether the Summary of Show Cause Notice in GST DRC-01, along with an attachment of tax determination, constitutes a valid Show Cause Notice as required under Section 73(1) of the Central Goods and Services Tax Act, 2017 (Central Act) and the corresponding State Act? 2. Whether the Statement of tax determination issued under Section 73(3) of the Central Act and State Act can substitute the mandatory issuance of a Show Cause Notice under Section 73(1)? 3. Whether the issuance of Summary of Show Cause Notice, Summary of Statement of tax determination, and Summary of Order in GST DRC forms dispenses with the requirement of a proper Show Cause Notice, Statement, and Order authenticated by the Proper Officer as stipulated by Section 73 and Rule 26(3) of the Rules of 2017? 4. Whether the impugned orders are in violation of Section 75(4) of the Central Act and State Act for failure to provide an opportunity of hearing to the petitioners? Petitioner's arguments: The Summary of Show Cause Notice and its attachment do not fulfill the requirements of a proper Show Cause Notice. Proceedings initiated without a valid Show Cause Notice are bad in law. The attachments were not authenticated. The orders were passed without providing an opportunity for personal hearing, violating Section 75(4). Revenue's arguments: Not recorded in the judgment.