Ms Tirupati Trading Corporation Through Its Proprietor Shri Bishwojit Roy 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 opportunity of personal hearing, which is a mandatory requirement under the Act. The Court found that the DRC-01 notices were vague and lacked details, violating the principles of natural justice. Furthermore, the issuance of DRC-07 notices without proper adjudication and without providing relied-upon documents or statements was also found to be in violation of Rule 142(5) of the JGST Rules. The Court explicitly stated that it was not going into the merits of the cases but quashed the impugned orders for procedural irregularities. The Court also left open the question of whether an assessee can invoke jurisdiction under Section 108 of the JGST Act. The ratio decidendi is that compliance with the principles of natural justice, particularly the issuance of proper show cause notices and providing an opportunity of hearing, is fundamental and non-negotiable for valid tax proceedings.

Facts

Multiple petitioners, including M/s Samridhi Enterprises, M/s Raj Keshri Ispat & Energy Pvt. Ltd., and others, filed writ petitions before the Jharkhand High Court challenging various orders passed by the State Tax authorities under the Jharkhand Goods and Services Tax (JGST) Act, 2017. The core of the dispute revolves around the issuance of demand notices and adjudication orders. The petitioners contended that the authorities failed to follow due process, specifically by not issuing proper show cause notices, not providing relied-upon materials, and not granting an opportunity of hearing. The tax periods involved span from 2018-19 to other unspecified periods. The revenue authorities issued notices like DRC-01, DRC-07, and DRC-13, leading to demands for tax, interest, and penalties.

Key Issues

1. Whether the show cause notices issued under Section 73/74 of the JGST Act, along with the summary show cause notice under Rule 142(1), were mandatory and if their absence vitiates the entire proceedings? (Question of law) 2. Whether the principles of natural justice, including the opportunity of hearing and providing relied-upon materials, were complied with by the revenue authorities in passing the impugned orders? (Question of mixed law and fact) Petitioner's Arguments: The petitioners argued that the revenue authorities failed to issue proper show cause notices, which are mandatory under Sections 73 and 74 of the JGST Act. They also contended that no relied-upon materials or enquiry reports were provided, and no opportunity of hearing was granted, thereby violating the principles of natural justice and specific provisions like Section 75(4) and 75(5) of the Act. They cited the case of M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand &Ors. for the mandatory nature of hearing. The petitioners also pointed out that the DRC-01 notices were vague and lacked details, and that DRC-07 notices were issued without proper adjudication. They relied on cases like M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand. Revenue's Arguments: The judgment notes that the learned counsel for the respondents could not produce any documents to satisfy that proper procedure was followed in passing the orders. The judgment does not record any specific arguments made by the revenue in defense of their actions.