M/S Om Prakash Store Through Its Partner Om Prakash Prasad vs. The State Of Jharkhand Through The Commissioner State Tax Department

Held

The Court held that the statutory requirements under Sections 73 and 75 of the JGST Act, as well as the principles of natural justice, were not followed by the respondent authorities. The adjudication orders were found to be non-speaking and passed without a proper application of judicial mind. The Court noted that the petitioner was not afforded a proper opportunity of hearing, as indicated by the 'NA' entry for personal hearing in the show cause notice. The Court relied on its previous judgment in M/s NKAS Services Private Limited Versus The State of Jharkhand & Ors., which emphasized the necessity of specific allegations in show cause notices and the right to a reasonable opportunity to be heard. Consequently, the impugned adjudication orders dated September 12, 2019, and the consequential demand notices in Form GST DRC-07 dated September 18, 2019, were quashed and set aside. The matter was remitted back to the adjudicating authority to issue a fresh show cause notice and pass a fresh order after providing due opportunity to the petitioner. The Court also directed that the 10% deposit made by the petitioner could be refunded or adjusted against future tax liability upon the fresh adjudication.

Facts

The petitioner, M/s. Om Prakash Store, filed two writ petitions challenging adjudication orders dated September 12, 2019, passed by the Deputy Commissioner of State Tax, Jamshedpur Circle. The first petition (W.P. (T) No. 1526 of 2022) pertains to the financial year 2017-18, and the second (W.P. (T) No. 1527 of 2022) relates to the period from April 2018 to June 2019. The petitioner alleged that the adjudication orders were passed without following statutory provisions and principles of natural justice. The petitioner claimed to have first learned about the adjudication proceedings when a bank attachment notice (Form GST DRC-13) was issued on September 8, 2021, attaching its bank account. The petitioner contended that no proper show cause notice, adjudication order, or summary of order was served. The tax period in dispute is not explicitly quantified but arises from discrepancies between GSTR-3B and GSTR-2A returns.

Key Issues

1. Whether the adjudication orders dated September 12, 2019, passed under Section 73(1) of the Jharkhand Goods and Service Tax (JGST) Act, are illegal and arbitrary for non-compliance with statutory provisions and principles of natural justice? Petitioner's arguments: The petitioner argued that the adjudication orders were passed ex-parte without proper service of show cause notices and without affording an opportunity for personal hearing. The bank account was attached based on Form GST DRC-07 without prior notice. The petitioner also contended that Section 16(2) of the GST Act does not restrict ITC claims based on GSTR-2A reflection, especially when GSTR-2 and GSTR-3 filing remained suspended. Reliance was placed on a GST Council press release clarifying that GSTR-2A facilitation does not impact ITC claims on a self-assessment basis. The petitioner further argued that the show cause notice issued was vague and lacked specific allegations, violating principles of natural justice, as evidenced by the 'NA' entry for the date, time, and venue of personal hearing. Revenue's arguments: The judgment does not record specific arguments made by the revenue or state respondents.