Rajesh Garg vs. Commissioner (State Tax) & Ors.

Facts

The petitioner, Rajesh Garg, challenged a Show Cause Notice dated March 18, 2021, issued under Section 74 of the Central Goods and Services Tax Act, 2017. He was also aggrieved by four Summary of Orders (GST DRC-07), all dated September 7, 2021, which created demands against him. These orders covered the periods from 2017 to March 2018, April 2018 to March 2019, April 2019 to March 2020, and April 2020 to March 2021. The petitioner argued that an order dated March 18, 2021, appended to the Show Cause Notice, was not a final adjudication order. The respondent conceded that this order was merely a formation of opinion for issuing the Show Cause Notice and that no independent adjudicatory order existed after the petitioner filed his reply.

Held

The Court held that the impugned orders (DRC-07) dated September 7, 2021, were set aside. The reasoning was based on the concession by the respondent that the order dated March 18, 2021, was not a final adjudication order and that no independent adjudicatory order existed after the petitioner filed his reply. The Court directed the Proper Officer to re-adjudicate the Show Cause Notice. This re-adjudication must take into consideration the reply filed by the petitioner and also provide an opportunity for a personal hearing. The Show Cause Notice is to be disposed of within the period prescribed by Section 75(3) of the Act. The ratio decidendi is that statutory demands under GST must be preceded by a proper adjudication process, including consideration of the assessee's reply and an opportunity for a hearing, failing which the consequent demand orders are liable to be quashed.

Key Issues

1. Whether the impugned Summary of Orders (GST DRC-07) dated September 7, 2021, are validly passed, considering the absence of a proper adjudication order following the petitioner's reply to the Show Cause Notice issued under Section 74 of the Central Goods and Services Tax Act, 2017? Petitioner's Contention: The petitioner argued that the order dated March 18, 2021, appended to the Show Cause Notice, was not a final adjudication order. He contended that after filing his reply, there was no further adjudication, and the impugned GST DRC-07 orders were issued without proper assessment. Respondent's Contention: The respondent conceded that the order dated March 18, 2021, was not a final adjudication order but rather a formation of opinion for issuing the Show Cause Notice. The respondent further stated that the record did not reveal any independent adjudicatory order after the petitioner filed his reply.