Ms Kaushal Associates Through Its Authorized Signatory Shri Mukund Choubey vs. The State Of Jharkhand

Held

The Court held that the summary of show cause notices (DRC-01) and all subsequent orders, including adjudication orders and penalty orders, issued by the respondent authorities in all the writ applications were bad in law. This was primarily because these orders were issued without the mandatory issuance of proper show cause notices and without affording the petitioners an opportunity of personal hearing, which are fundamental requirements under the JGST Act and Rules. The Court found that the DRC-01 notices were vague and lacked details, violating the principles of natural justice. Furthermore, the revenue authorities failed to provide any relied-upon documents or reports to the petitioners. The Court explicitly left open the question of whether an assessee can invoke jurisdiction under Section 108 of the JGST Act. Consequently, all the impugned summary of SCNs and orders were quashed and set aside. The matters were remitted back to the concerned respondents to pass fresh orders in accordance with the law and specific provisions of the JGST Act, 2017, after strictly following the principles of natural justice.

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 issue revolved around the alleged non-compliance with procedural requirements by the revenue authorities. The petitioners contended that the authorities failed to issue proper show cause notices, provide relied-upon materials, and grant opportunities for personal hearing, thereby violating the principles of natural justice. The revenue authorities, on the other hand, did not present any documentation to demonstrate adherence to the prescribed procedures. The impugned orders included DRC-01 (Show Cause Notice), DRC-07 (Order of Demand), and subsequent penalty or adjudication orders.

Key Issues

1. Whether the summary of show cause notices (DRC-01) and subsequent orders (DRC-07, adjudication orders, penalty orders) issued by the Jharkhand 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 Section 73/74 and Rule 142(1) of the JGST Act and Rules? Petitioner's Arguments: The petitioners argued that the show cause notices were vague, lacked necessary details, and did not provide the materials relied upon by the authorities. They contended that the failure to issue proper show cause notices and grant an opportunity of hearing, as mandated by Section 75(4) and 75(5) of the JGST Act, vitiated the entire proceedings. They relied on the High Court's previous decisions in cases like 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 (State Tax authorities) failed to produce any documents or evidence to demonstrate that proper procedures were followed in issuing the impugned orders.