Ms Ashirwad Enterprises Through Its Partner Shri Sanjay Kumar Shah vs. The State Of Jharkhand

Held

The Court held that the summary of show cause notices (DRC-01), adjudication orders, and all subsequent orders issued by the department in all the writ applications were bad in law. This was due to the failure to issue any show cause notice, the absence of an opportunity for personal hearing, and the lack of detailed orders as required by the JGST Act. The Court found that the notices were vague and lacked details, violating the principle of natural justice. The Court specifically noted that the failure to issue mandatory show cause notices under Section 73/74 of the JGST Act, along with a summary show cause notice under Rule 142(1), went to the root of the matter and vitiated the entire proceedings. The Court explicitly left open the question of whether an assessee can invoke jurisdiction under Section 108 of the JGST Act. Consequently, the Court quashed and set aside the impugned notices and orders and remitted the matters back to the concerned respondents to pass fresh orders in accordance with the law and specific provisions of the JGST Act, 2017, after following the principles of natural justice.

Facts

These writ petitions were filed by various assessees challenging orders passed by the Jharkhand GST authorities. The petitioners, including M/s Samridhi Enterprises, M/s Raj Keshri Ispat & Energy Pvt. Ltd., and others, contended that the revenue authorities failed to follow due process in issuing demand notices and confirming tax liabilities. Specifically, the petitioners argued that no proper show cause notices were issued, nor were they provided with relied-upon materials or afforded an opportunity of personal hearing. The revenue authorities, represented by the State of Jharkhand and its GST Commissioner, Deputy Commissioners, and State Taxes Officers, were challenged for their actions in confirming demands for tax, interest, and penalty. The tax periods involved varied across the petitions, with some dating back to 2018-19.

Key Issues

1. Whether the summary of show cause notices (DRC-01), adjudication orders, and subsequent orders issued by the revenue authorities are bad in law for non-compliance with the principles of natural justice, specifically the mandatory issuance of show cause notices and the provision of an opportunity for personal hearing, as required by Sections 73, 74, and 75 of the Jharkhand Goods and Services Tax (JGST) Act, 2017 and Rule 142 of the JGST Rules? Petitioner's arguments: The petitioners argued that the revenue authorities failed to issue proper show cause notices (DRC-01) and did not provide them with the relied-upon materials or grant them an opportunity for a personal hearing. They contended that the notices issued were vague and lacked necessary details, violating the principles of natural justice. They relied on the judgment in M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand &Ors. and M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand. Revenue's arguments: The respondents (revenue authorities) failed to produce any documents or evidence to satisfy the Court that proper procedures were followed in passing the impugned orders. They could not demonstrate the issuance of mandatory show cause notices or the provision of an opportunity for hearing.