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, 2017, and the principles of natural justice were not followed by the respondent authorities. The adjudication orders passed were not in accordance with the procedure prescribed by law and were therefore liable to be quashed and set aside. The Court found that a proper show cause notice under Section 73(1) and an adequate opportunity of hearing were not afforded to the petitioner. The indication of 'NA' (Not Applicable) for the date, time, and venue of personal hearing in the show cause notice further supported the conclusion that no opportunity for personal hearing was given. 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 defend oneself. Consequently, the adjudication orders dated September 12, 2019, and the consequential demand notices (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. Regarding the 10% deposit of tax amount, the Court directed that it could be claimed as a refund if the fresh order was not against the petitioner, or adjusted against future tax liability.

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) covers the period from April 2018 to June 2019. The petitioner contended that the adjudication orders were passed without following statutory provisions and principles of natural justice. Specifically, the petitioner claimed that no proper show cause notice, adjudication order, or summary of order was served. They only became aware of the proceedings when a bank attachment notice (Form GST DRC-13) was issued on September 8, 2021, to their banker. The petitioner sought certified copies of the orders, which were provided on October 6, 2021, and January 6, 2022, respectively.

Key Issues

1. Whether the adjudication orders passed under Section 73(1) of the Jharkhand Goods and Service Tax (JGST) Act, 2017, are illegal and arbitrary due to non-compliance with statutory provisions and principles of natural justice? (Section 73, Section 75, JGST Act, 2017) Petitioner's Arguments: - The respondent authorities passed adjudication orders without serving a proper show cause notice and without affording an opportunity for a personal hearing, thereby violating principles of natural justice. - The petitioner only came to know about the adjudication order when their bank account was attached, and the bank attachment notice was issued without serving the summary of order (DRC-07). - The adjudication order is a non-speaking order passed without application of judicial mind, in defiance of Sections 73 and 75 of the JGST Act. - Section 16(2) of the GST Act does not stipulate that a dealer cannot claim Input Tax Credit (ITC) in GSTR-3B if it's not reflected in GSTR-2A, especially since GSTR-2 and GSTR-3 filing remained suspended. - Press releases from the GST Council clarified that GSTR-2A is for taxpayer facilitation and does not impact ITC availability on a self-assessment basis. Revenue's Arguments: - The judgment records no specific arguments made by the revenue or state.