Sidhi Vinayak Metal And Salt Company Private Limited Through Its Directors Satya Prakash Singh vs. The State Of Jharkhand

Held

The Court held that in all the writ applications, no proper show cause notice was issued, and no relied-upon materials were provided to the petitioners. The Form GST DRC-01, when issued, was found to be vague and lacking in detail, violating the principles of natural justice. The Court noted that the revenue authorities failed to produce any documentation to demonstrate that proper procedures were followed. Furthermore, the Court found that no detailed adjudication orders were passed, and the petitioners were served with DRC-07 notices, which, along with DRC-13 in some cases, were issued in clear violation of Rule 142(5) of the JGST Rules. The opportunity of hearing, mandated by Section 75(4) and 75(5) of the Act, was not granted, thus violating principles of natural justice. The Court emphasized that the failure to issue mandatory show cause notices under Section 73/74 of the JGST Act, along with a summary notice under Rule 142(1), goes to the root of the matter and vitiates the proceedings. Consequently, the Court quashed and set aside the summary of SCNs, adjudication orders, and all subsequent orders issued by the department in these writ applications. The matters were remitted back to the concerned respondents to pass fresh orders in accordance with the law after following the principles of natural justice. The Court explicitly left open the question of whether an assessee can invoke jurisdiction under Section 108 of the JGST Act.

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 issued 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, show cause notices, and adjudication orders. The petitioners contended that these actions were taken without proper procedure, specifically without issuing mandatory show cause notices and 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, and the amounts in dispute, though substantial in some cases (e.g., ₹10,32,300.00 in W.P.(T) No. 745 of 2021), were not the primary focus of the court's decision.

Key Issues

1. Whether the show cause notices (DRC-01) issued by the revenue authorities were vague and lacked sufficient detail, thereby violating the principles of natural justice and the provisions of the JGST Act and Rules? 2. Whether the failure to issue a proper show cause notice under Section 73 or 74 of the JGST Act, along with a summary show cause notice under Rule 142(1), vitiates the entire proceedings? 3. Whether the adjudication orders and subsequent demand notices (DRC-07, DRC-13) were passed without affording the petitioners an adequate opportunity of hearing, as mandated by Section 75(4) and 75(5) of the JGST Act? Petitioner's arguments: The petitioners argued that the revenue authorities failed to issue proper show cause notices, which were vague and did not provide relied-upon materials. They contended that this non-compliance with the principles of natural justice and statutory requirements rendered the subsequent orders bad in law. They relied on the principle that opportunity of hearing is mandatory and cited 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 of Jharkhand and its officers) could not produce any documents to satisfy the court that proper procedures were followed in passing the impugned orders.