M/S Shri Sharma Steeltech INDIA PVT. LTD. vs. State Of Rajasthan

Held

The Court held that Rule 142(1A) and 142(2A) of the RGST/CGST Rules, 2017, indicate that it is discretionary for the proper officer to issue a communication or not. While a communication was issued in this case and the petitioner filed submissions, there is no provision within the Rules for adjudicating these submissions at the DRC-01A stage. The Court differed from the Calcutta High Court judgments cited by the petitioner, reasoning that the Rules do not provide for an opportunity of hearing or deciding submissions made against a proposed liability at this preliminary stage. Rule 142(1A) is merely a communication, and the assessee's right to a hearing arises only after a show cause notice under Rule 142(1)(a) is issued. The Court emphasized that taxing statutes must be interpreted strictly as promulgated, citing *Ajmera Housing Corporation & Ors. Vs. Commissioner of Income Tax*. Since only a communication was issued and no show cause notice, the writ petition was deemed premature and filed to stall proceedings. Therefore, the petition was dismissed.

Facts

The petitioner, M/s Shri Sharma Steeltech India Pvt. Ltd., filed a writ petition before the Rajasthan High Court challenging the non-consideration of its reply submitted pursuant to a notice under GST DRC-01A. The petitioner argued that Rule 142(1A) and 142(2A) of the Rajasthan Goods & Service Tax (RGST)/Central Goods & Service Tax (CGST) Rules, 2017, mandate that authorities must consider the reply before issuing a show cause notice under Rule 142(1)(a). The petitioner also relied on Calcutta High Court judgments suggesting an opportunity of hearing is required even at the pre-show cause intimation stage. The respondents, State of Rajasthan and Union of India, contended that Rule 142(1A) is discretionary and that there is no provision for affording an opportunity of hearing at this stage, with the right to hearing arising only after a show cause notice under Rule 142(1)(a) is issued.

Key Issues

1. Whether Rule 142(1A) and 142(2A) of the RGST/CGST Rules, 2017, mandate the consideration of a reply submitted against a proposed liability communicated under DRC-01A before issuing a show cause notice under Rule 142(1)(a)? - Petitioner's argument: Yes, the rules require consideration of the reply. They cited Calcutta High Court judgments in *Eden Real Estate Pvt. Ltd. & Anr. Vs. The Senior Joint Commissioner of Revenue Kolkata South Circle, WBGST & Ors.* and *Diamond Beverages Private Limited & Anr. Vs. The Assistant Commissioner of CGST & CX, Taltala Division II Kolkata South Commissioner & Ors.*, which held that an opportunity of hearing is required at the pre-show cause intimation stage. - Revenue/State's argument: No, Rule 142(1A) is discretionary ('proper officer may'), and there is no provision for affording an opportunity of hearing or deciding submissions made against the proposed liability at this stage. The right to hearing arises only after a show cause notice under Rule 142(1)(a) is issued. They relied on the Supreme Court judgment in *Commissioner of Central Excise, Haldia Vs. Krishna Wax Private Limited*.