Vishkarma Industries Through Its Proprietor Ashish Singh vs. The State Of Jharkhand Through The Commissioner Of State Tax

Held

The Court held that a summary of a show cause notice cannot substitute a proper show cause notice, and its issuance constitutes a violation of the principles of natural justice. The Court found that the impugned show cause notices lacked the foundational allegations required for proceedings under Section 74 and were vague. Furthermore, the Court noted that contrary to Section 75(4) and 75(5) of the Act and the ratio in *M/s Godavari Commodities Ltd.*, no opportunity of hearing was granted to the petitioners before passing adverse orders, and relied-upon documents were not supplied. Consequently, the impugned summary show cause notices in Form GST DRC-01 and the impugned summary of orders in Form GST DRC-07 were quashed. The Court explicitly stated that the writ petitions were decided solely on the grounds of violation of principles of natural justice and procedural irregularities, without commenting on the merits of the case. The respondents were granted liberty to initiate fresh proceedings by issuing a proper show cause notice in accordance with law within four weeks. The Court also clarified that the quashing of these notices would not impede the DGGI from proceeding against the petitioners in their pending investigations.

Facts

Three writ petitions were filed challenging show cause notices and summary of orders issued under the Goods and Services Tax (GST) Act by State Tax authorities. The petitioners, Vishkarma Industries, Kanchan Alloys & Steels, and Sakambari Metalicks, all based in Rajasthan, were issued notices by the Deputy Commissioner/Assistant Commissioner of State Tax, Singhbhum Circle, Jamshedpur, for alleged wrongful claim and distribution of Input Tax Credit (ITC). The petitioners contended that the notices were not in compliance with Section 74(1) of the JGST Act read with Rule 142, as they were summary notices and lacked proper details. They also alleged violation of principles of natural justice due to inadequate opportunity for hearing and non-supply of relied-upon documents. The proceedings were pending with the Director General of Goods & Service Tax Intelligence (DGGI). During the pendency of the writ petitions, the petitioners were allowed to challenge the summary of orders in Form GST DRC-07.

Key Issues

1. Whether the summary show cause notices issued in Form GST DRC-01, without a proper show cause notice in terms of Section 74(1) of the JGST Act read with Rule 142, are valid? (Question of law) 2. Whether the petitioners were denied adequate opportunity of hearing and access to relied-upon documents, thus violating the principles of natural justice? (Question of mixed law and fact) Petitioner's Arguments: - The issuance of a summary show cause notice cannot substitute the requirement of a proper show cause notice under Section 74 of the Act. Reliance was placed on *Nkas Services Private Limited Vrs. State of Jharkhand & others* (2021 SCC Online Jhar 1266). - Principles of natural justice were violated as no adequate opportunity of hearing was granted, no date of hearing was fixed, and relied-upon documents were not supplied. Reliance was placed on *M/s Godavari Commodities Ltd. Vrs. State of Jharkhand & Ors.* (dated 18.04.2022) and *Natwar Singh Vrs. Director of Enforcement & another* (2010(13) SCC 255). - In most cases, no proper adjudication order was passed or supplied, despite the petitioners obtaining certified copies of order sheets. Respondents' Arguments: - The judgment records no specific arguments from the respondents regarding the validity of the show cause notices or the adherence to principles of natural justice.