Prity Dokania vs. The State Of Jharkhand

Held

The Court held that the summary of Show Cause Notices (SCN), 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 JGST Act. The Court found that the DRC-01 notices were vague and lacked details, violating the principles of natural justice. It was also noted that no detailed orders were passed against the petitioners, and the DRC-07 notices were issued in violation of Rule 142(5) of the JGST Rules. The Court emphasized that the failure to issue mandatory SCNs under Section 73/74 of the JGST Act, along with the summary SCN under Rule 142(1), goes to the root of the matter and vitiates the entire proceedings. 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 SCN 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 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 of hearing. The revenue authorities, represented by the State of Jharkhand and its GST officials, were expected to defend their actions. The tax periods involved varied across the petitions, and the amounts in dispute were substantial, as indicated by the sample DRC-01 for M/s Samridhi Enterprises showing a demand of ₹23,56,161.30 for the financial year 2018-19.

Key Issues

1. Whether the show cause notices (SCN) issued under Section 73/74 of the JGST Act, along with the summary SCN under Rule 142(1), were mandatory and their absence vitiates the entire proceedings? 2. Whether the principles of natural justice, including the opportunity of hearing, were complied with by the revenue authorities in passing the impugned orders? 3. Whether the summary of SCN, adjudication orders, and subsequent orders issued by the department are bad in law due to procedural irregularities? Petitioner's Arguments: The petitioners argued that no proper show cause notice was issued, and the materials relied upon by the authorities were not provided. They contended that the DRC-01 notices were vague and lacked details, violating the principles of natural justice. Furthermore, they asserted that the DRC-07 notices, which were served, were in clear violation of Rule 142(5) of the JGST Rules, and no detailed orders were passed. The petitioners also highlighted that opportunities of hearing were not 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. Revenue's Arguments: The respondents, the State of Jharkhand and its tax officials, could not produce any documents to satisfy the court that proper procedures were followed in passing the orders, nor did they present any evidence to counter the petitioners' claims regarding the lack of proper show cause notices and hearing opportunities.