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 Summary Order dated October 13, 2020, issued under Rule 142, was passed without following the prescribed legal procedures, specifically the issuance of a DRC-01 notice and affording an opportunity of hearing to the petitioner. This was found to be a violation of the principles of natural justice. The Court relied on its previous judgment in M/s NKAS Services Pvt. Ltd. vs. State of Jharkhand & others, which dealt with a similar issue. The reasoning was that a proper show cause notice, detailing the contraventions or allegations, is a prerequisite for passing any order under Section 73 of the Act. A summary notice in Form DRC-01 cannot substitute a proper show cause notice. Consequently, the impugned order was quashed. The Court explicitly stated 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 challenging a Summary Order in Form DRC-07, dated October 13, 2020, issued by the Deputy Commissioner, SGST, Koderma. The petitioner argued that this order was passed without issuing a DRC-01 notice or any notice under Section 73(1) of the CGST Act, 2017, and without affording an opportunity of hearing. The petitioner contended that their case was similar to that of M/s NKAS Services Pvt. Ltd. vs. State of Jharkhand & others, a previous case decided by the same High Court. The respondents, represented by the State of Jharkhand through the Commissioner of State Taxes and the Deputy Commissioner, SGST, Koderma, accepted the petitioner's contention.

Key Issues

1. Whether a Summary Order in Form DRC-07 could be passed without prior issuance and service of a notice in Form DRC-01 and without a notice under Section 73(1) of the CGST Act, 2017, thereby violating principles of natural justice? Petitioner's Argument: The petitioner argued that the impugned order was passed illegally and arbitrarily without following the prescribed legal modalities, specifically the issuance of a DRC-01 notice and an opportunity for hearing, which constitutes a violation of natural justice. They relied on the judgment in M/s NKAS Services Pvt. Ltd. vs. State of Jharkhand & others. Revenue's Argument: The learned G.P. II for the respondents accepted the petitioner's contention, implying agreement with the petitioner's argument regarding the procedural infirmities.