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 CGST/RGST Rules, 2017, indicate that it is discretionary for the proper officer to issue a communication under Rule 142(1A). While a communication was issued in this case and the petitioner filed submissions, the Rules do not provide for the adjudication of these submissions or for affording an opportunity of hearing at this stage. The Court differed from the judgments cited by the petitioner, stating that the Rules do not contemplate affording an opportunity of hearing at different stages, and the right to 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 the Supreme Court in Ajmera Housing Corporation & Ors. v. Commissioner of Income Tax. Since only a communication had been issued and no show cause notice, the Court found no reason to entertain the writ petition, viewing it as an attempt to stall proceedings. Therefore, the writ 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 in response to a notice issued under GST DRC-01A. The petitioner argued that Rule 142(1A) and 142(2A) of the CGST/RGST Rules, 2017, mandate that authorities must consider the reply before issuing a show cause notice under Rule 142(1)(a). The petitioner relied on judgments from the Calcutta High Court in similar cases. The respondents, the State of Rajasthan and the Union of India, contended that Rule 142(1A) is discretionary and that there is no provision for affording an opportunity of hearing at the pre-show cause notice stage, unlike after a show cause notice is issued under Rule 142(1)(a). They cited Supreme Court judgments emphasizing that writ petitions are generally not entertained against mere show cause notices.

Key Issues

1. Whether Rule 142(1A) and 142(2A) of the CGST/RGST Rules, 2017, require the proper officer to consider the reply submitted by the assessee against a proposed liability communicated via GST DRC-01A before issuing a show cause notice under Rule 142(1)(a)? - Petitioner's argument: Yes, the rules mandate consideration of the reply, citing Calcutta High Court judgments in Eden Real Estate Pvt. Ltd. and Diamond Beverages Private Limited. The petitioner's reply to the intimation was not considered. - Revenue's argument: No, Rule 142(1A) is discretionary ('proper officer may'), and Rule 142(2A) only allows submissions. There is no provision for affording an opportunity of hearing or adjudicating submissions at this pre-show cause notice stage. Supreme Court judgments in Commissioner of Central Excise, Haldia v. Krishna Wax Private Limited and others hold that writ petitions should not be entertained against mere show cause notices, and the present case involves only a communication, not a show cause notice. 2. Whether the authorities are required to afford an opportunity of hearing at the stage of GST DRC-01A communication? - Petitioner's argument: Yes, based on Calcutta High Court interpretations, an opportunity of hearing should be provided even at the pre-show cause notice stage. - Revenue's argument: No, the Rules do not provide for an opportunity of hearing at this stage; such a right arises only after a show cause notice under Rule 142(1)(a) is issued.