Ms Paul Wurth INDIA P LTD Through Its Authorized Signatory Shri Praveen Aggarwal 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 primarily because these orders were issued without the mandatory issuance of any show cause notice and without affording the petitioners an opportunity of personal hearing, which is a mandatory requirement under the JGST Act. The Court found that the DRC-01 notices were vague and lacked details, violating the principles of natural justice. The revenue authorities failed to produce any documentation to prove compliance with the procedural requirements. Consequently, the Court quashed and set aside the various DRC-01, DRC-02, DRC-07, DRC-13, and adjudication orders listed in the judgment for each writ petition. The Court explicitly left open the question of whether an assessee can invoke jurisdiction under Section 108 of the JGST Act. All matters were remitted back to the concerned respondents to pass fresh orders in accordance with the law after strictly following the principles of natural justice.

Facts

The petitioners, various business entities, filed writ petitions before the Jharkhand High Court challenging orders passed by the State Tax authorities under the Jharkhand Goods and Services Tax (JGST) Act, 2017. The core of the challenge was the alleged violation of natural justice principles. The petitioners contended that the authorities failed to issue proper show cause notices, provide relied-upon materials, and grant an opportunity of hearing before passing adverse orders. The revenue authorities, represented by the State of Jharkhand and its GST department officials, were unable to produce any documentation to demonstrate that the prescribed procedures were followed. The tax periods involved varied across the petitions, and the disputed amounts, including tax, interest, and penalty, were substantial in some cases, such as ₹10,32,300.00 in tax and ₹23,56,161.30 in total dues for M/s Samridhi Enterprises for the financial year 2018-19.

Key Issues

1. Whether the summary of show cause notices (DRC-01) and subsequent orders (DRC-07, adjudication orders, DRC-13) issued by the State Tax authorities are bad in law for non-compliance with the principles of natural justice, specifically the failure to issue proper show cause notices and provide relied-upon materials, as required under the JGST Act, 2017? Petitioner's Arguments: The petitioners argued that the authorities failed 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). They contended that the DRC-01 notices were vague, lacked details, and violated the principles of natural justice. Furthermore, no relied-upon documents, statements, or enquiry reports were provided, and no opportunity of hearing was granted, contravening Sections 75(4) and 75(5) of the Act. They relied on the High Court's decision in M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand &Ors. and other cases like M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand. Revenue's Arguments: The respondents (State of Jharkhand and its officials) could not produce any documents to satisfy the Court that proper procedures were followed in passing the orders.