Shashank Shekhar Jha vs. Commissioner Of State Tax State Of Jharkhand Jharkhand Goods And Service Tax

Held

The Court held that the show-cause notices issued under Section 73(1) of the JGST Act, 2017, were vague and did not specify the contraventions, thereby violating the principles of natural justice. The Court reiterated its previous ruling in M/s NKAS SERVICES PRIVATE LIMITED, stating that a summary of show-cause notice in Form GST DRC-01 cannot substitute a proper show-cause notice. The Court found that the respondents had not brought on record any adjudication order. Regarding the penalty, the Court noted that the Summary of Order imposed 100% penalty, which is contrary to Section 73(9) of the Act, allowing only up to 10% of tax dues in proceedings under Section 73. The Court found a non-application of mind by the Deputy Commissioner. Consequently, the impugned show-cause notices and summaries of orders were quashed. The Court granted liberty to the Respondent No. 2 to initiate fresh proceedings after issuing a proper show-cause notice in accordance with law. The Court did not decide on the issue of whether Form GST ASMT-10 is a condition precedent for invoking Section 73 or 74.

Facts

Two writ petitions, W.P (T) No. 1237 of 2022 and W.P (T) No. 1244 of 2022, were filed before the Jharkhand High Court. Both petitions challenged show-cause notices, summary of show-cause notices (Form GST DRC-01), and summary of orders (Form GST DRC-07) issued by the Deputy Commissioner of State Tax, Godda & Dumka. The tax period in question for both petitioners was April 2018 to March 2019. The proceedings were initiated due to alleged mismatches between GSTR-3B and GSTR-2A, leading to the claim of undue Input Tax Credit (ITC). The petitioners argued that the notices were vague, lacked specific particulars of contravention, and that the summary of show-cause notices could not substitute a proper show-cause notice. They also contended that the 100% penalty imposed in the summary of orders was impermissible under Section 73(9) of the JGST Act, 2017, which allows a maximum penalty of 10% of tax dues in such proceedings. The respondents argued that standard formats were followed and that the GSTR-2A figures are dynamic. They also raised the plea of alternative remedy.

Key Issues

1. Whether the show-cause notices issued under Section 73(1) of the JGST Act, 2017, are legally valid and sufficiently specific to enable the petitioners to defend themselves? This issue turns on Section 73(1) of the JGST Act, 2017. The petitioner argued that the notices were vague, did not enumerate specific contraventions, and failed to strike out relevant particulars, thus violating principles of natural justice. The respondent contended that standard formats were followed and the charges, such as the difference between GSTR-3B and GSTR-2A, were mentioned. 2. Whether the Summary of Show-Cause Notice in Form GST DRC-01 can substitute a proper show-cause notice as required by Section 73(1) of the JGST Act, 2017? This issue turns on Section 73(1) of the JGST Act, 2017. The petitioner relied on the High Court's judgment in M/s NKAS SERVICES PRIVATE LIMITED Versus State of Jharkhand & others. The respondent argued that the notices clearly mention the charge of difference between GSTR-3B and GSTR-2A. 3. Whether the imposition of 100% penalty in the Summary of Order (Form GST DRC-07) is permissible under Section 73(9) of the JGST Act, 2017? This issue turns on Section 73(9) of the JGST Act, 2017. The petitioner argued that Section 73(9) allows a penalty up to 10% of tax dues, while 100% penalty is only permissible under Section 74(9). The respondent did not specifically deny this plea.