Ms Rajkeshri Ispat And Energy PVT LTD Through Its Director Shri Manish Kumar Mishra 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 fundamental requirement under the JGST 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 a proper preceding adjudication process and the failure to provide relied-upon documents or reports were also noted as procedural infirmities. The Court explicitly stated that it was not going into the merits of the cases. The ratio decidendi is that non-compliance with the mandatory procedural requirements, particularly the issuance of a detailed show cause notice and the grant of an opportunity of hearing, vitiates the entire assessment and demand proceedings. Consequently, all the impugned summary of SCN and orders were quashed and set aside. The matters were remitted back to the concerned respondents to pass fresh orders in accordance with law 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 of the dispute revolved around the issuance of demand notices and subsequent orders for tax, interest, and penalty. The petitioners contended that the authorities failed to follow due process, specifically by not issuing proper show cause notices and not providing an opportunity for a personal hearing. The revenue authorities, represented by the State of Jharkhand and its GST officers, were expected to defend their actions. The tax periods involved varied across the petitions, with some dating back to 2018-19. The procedural history indicates that the petitioners received notices like DRC-01, DRC-07, and DRC-13, but they argued these were vague and lacked necessary details.

Key Issues

1. Whether the show cause notices (DRC-01) issued by the respondent authorities under Section 74 of the JGST Act, 2017, were sufficiently detailed and complied with the principles of natural justice, particularly regarding the provision of relied-upon materials and the opportunity for a personal hearing? (Question of law and mixed fact and law, turning on Section 74 and Rule 142 of the JGST Rules). 2. Whether the adjudication orders and subsequent demand notices (DRC-07, DRC-13) passed by the respondent authorities are vitiated due to the alleged non-compliance with mandatory procedural requirements, such as the issuance of a proper show cause notice and the grant of an opportunity of hearing? (Question of law and mixed fact and law, turning on Section 75 of the JGST Act). Petitioner's contentions: The petitioners argued that no proper show cause notice was issued, and the DRC-01 notices were vague and lacked essential details, violating the principles of natural justice. They also contended that no relied-upon materials or enquiry reports were provided, and no opportunity for a personal hearing was granted, which is mandatory under Section 75(4) and 75(5) of the JGST Act. They relied on the High Court's previous decisions in M/s. Godavari Commodities Ltd. Vs. The State of Jharkhand &Ors, M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand (W.P.(T) No.2444 of 2021), and M/s NKAS Services Pvt. Ltd. Vs. State of Jharkhand (W.P.(T) No.2659 of 2021). Revenue's contentions: 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.