Vikash Kumar Singh 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 as they did not strike out relevant particulars or enumerate specific contraventions, thereby preventing the petitioners from furnishing a proper reply and violating the principles of natural justice. The Court reiterated its previous finding in M/s NKAS SERVICES PRIVATE LIMITED that a Summary of Show Cause Notice in Form GST DRC-01 cannot substitute the requirement of a proper show-cause notice under Section 73(1). Furthermore, the Court found that the Summary of Order imposing a 100% penalty was in contravention of Section 73(9) of the Act, which allows for a penalty up to 10% of the tax dues. The Court noted a lack of denial from the respondents regarding the impermissibility of a 100% penalty under Section 73(9). 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 the law. The issue of whether Form GST ASMT-10 is a condition precedent for invoking Section 73 or 74 was expressly left undecided.

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, summaries of show-cause notices (Form GST DRC-01), and summaries 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 particulars of contravention, and that the summary of the order imposed a 100% penalty, which is impermissible under Section 73(9) of the JGST Act, 2017. The respondents contended that standard formats were followed and that the GSTR-2A figures are dynamic.

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? 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? 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? Petitioner's arguments: The show-cause notices are vague and do not enumerate specific contraventions, violating principles of natural justice and the ruling in M/s NKAS SERVICES PRIVATE LIMITED. The Summary of Show Cause Notice cannot substitute a proper show-cause notice. The 100% penalty is impermissible under Section 73(9) and can only be levied under Section 74(9). Proceedings suffer from procedural violations. Revenue's arguments: Standard formats provided by GSTN were followed, mentioning the difference between GSTR-3B and GSTR-2A as the violation. GSTR-2A is dynamic, and any changes due to late filing by suppliers were not brought to the department's notice. The alternative remedy of appeal under Section 107 is available.