M/S Nitai Kangsa Banik And Anr vs. The Union Of INDIA And 3 Ors.

Held

The Court held that the 'Summary of Show Cause Notice' in GST DRC-01 is not a substitute for a 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 under Section 73. Furthermore, the Statement of Determination of Tax under Section 73(3) cannot substitute the mandatory Show Cause Notice. The Court emphasized that the issuance of summaries in DRC forms does not dispense with the requirement of issuing a proper Show Cause Notice, Statement, and Order, all of which must be authenticated as per Rule 26(3) of the Rules of 2017. The Court found that the impugned orders violated Section 75(4) as no opportunity of hearing was provided. Consequently, the impugned orders were set aside and quashed. However, in the interest of justice, 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 to the service of the judgment for computing the time limit under Section 73(10).

Facts

The petitioners, including Construction Catalysers Private Limited, Assam Gramin Vikash Bank, M/s Nitai Kangsa Banik, and Aurora Fine Arts, challenged various orders passed by the State Tax authorities in Assam. The core issue revolved around the issuance of Show Cause Notices (SCNs) and subsequent orders under Section 73 of the GST Acts. Petitioners contended that they received 'Summary of Show Cause Notice' in GST DRC-01, often with an attachment detailing tax determination, but not a proper SCN as required by law. In some cases, the attachments were not authenticated. The tax periods involved were primarily 2017-18 and July 2017-March 2018. The authorities passed orders, often citing unsatisfactory replies or failure to attend personal hearings, despite the alleged deficiencies in the SCNs.

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 by Section 73(1) of the Central Goods and Services Tax Act, 2017 (Central Act) and the Assam Goods and Services Tax Act, 2017 (State Act)? 2. Whether the Statement of Determination of Tax under Section 73(3) of the Central Act and State Act can substitute the Show Cause Notice required under Section 73(1)? 3. Whether the Summary of Show Cause Notice, Summary of Statement of Determination of Tax, and Summary of Order, issued in GST DRC-01, GST DRC-02, and GST DRC-07 respectively, dispense with the requirement of a proper Show Cause Notice, Statement, and Order authenticated by the Proper Officer as per 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 not providing an opportunity of hearing, especially when no proper SCN was issued? Petitioner's arguments: The petitioners argued that the Summary of Show Cause Notice is not a substitute for a proper Show Cause Notice. They contended that the attachments were not authenticated and that the proceedings were initiated without a valid SCN. They also argued that the failure to provide a proper SCN and an opportunity for hearing violated their rights. They relied on the principle that parallel proceedings cannot run under Section 6(2)(b) of the Central Act in one instance. Revenue's arguments: The judgment does not explicitly record arguments from the revenue or state respondents regarding their defense against the petitioners' contentions on the validity of the SCNs and the procedural aspects.