M/S Techno Electric And Engineering Company Limited Through Pradeep Kumar Lohia vs. The State Of Jharkhand Through The Commissioner Of State Taxes

Held

The Court held that the impugned Summary Order dated August 5, 2021, issued under Rule 142, along with the Order passed under Section 73 of the JGST Act, 2017, dated August 4, 2021, were unsustainable. The Court found that the show cause notice, as reflected in the DRC-01, was deficient as it did not clearly state the contraventions committed by the petitioner. The Court reiterated the principle that a summary of a show cause notice in Form GST DRC-01 cannot substitute the requirement of a proper show cause notice. It emphasized that a show cause notice must lay down the foundation of the case, clearly stating the charges and allegations, to enable the assessee to defend themselves. Failure to do so violates principles of natural justice, making the proceedings vitiated. The Court quashed the impugned orders, stating that it had not gone into the merits of the challenge. The respondents were granted liberty to initiate fresh proceedings from the same stage in accordance with law within four weeks.

Facts

The petitioner, M/s Techno Electric & Engineering Company Limited, filed a writ petition before the Jharkhand High Court challenging a Summary Order in Form DRC-07 and an Order passed under Section 73 of the JGST Act, 2017, both dated August 4-5, 2021. The petitioner argued that these orders were passed without issuing a DRC-01 notice or a proper show cause notice under Section 73(1) of the CGST Act, 2017, thereby violating principles of natural justice. The petitioner sought to quash these orders and restrain the respondents, the State of Jharkhand through the Commissioner of State Taxes and the State Tax Officer, Ranchi South, from taking any action based on them. The petitioner contended that their case was covered by a previous judgment of the same court in M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand.

Key Issues

1. Whether a Summary Order in Form DRC-07 and an Order passed under Section 73 of the JGST Act, 2017, can be legally passed without prior issuance and service of a DRC-01 notice and a proper show cause notice under Section 73(1) of the CGST Act, 2017, thereby violating principles of natural justice? Petitioner's Arguments: The petitioner argued that the impugned orders were passed without adhering to the mandatory procedural requirements of issuing a DRC-01 notice and a proper show cause notice under Section 73(1). They contended that the summary order in Form DRC-07 was issued without affording them an opportunity to be heard, which is a violation of natural justice. The petitioner relied on the judgment in M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand, which dealt with similar procedural defects in show cause notices. Revenue's Arguments: The learned G.P. II for the respondents accepted the petitioner's contention that the case was squarely covered by the judgment in M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand.