M/S Shri Shyam Trading Company vs. Commissioner Of Chhattisgarh State Tax

Held

The Court held that the assessment order and the summary notice issued by the authority were not sustainable in law and were liable to be quashed. The Court found that the authority concerned failed to comply with the provisions of Section 73 of the CGST Act, 2017, and Rule 142 of the CGGST Rules, 2017. The judgment noted that Section 73 requires the authorities to specify reasons for issuing the notice and that it must be accompanied by a summary in the prescribed form as per Rule 142. Perusal of the record revealed that only a summary show cause notice was served, and the assessment order was passed solely based on this summary. The Court reasoned that this procedural lapse prejudiced the petitioner by preventing them from filing a proper reply. Consequently, the Court quashed the impugned summary notice and assessment order. The competent authority was granted liberty to issue a fresh show cause notice, along with the summary notice, strictly in accordance with Section 73 and Rule 142 before passing a fresh assessment order. The petition was allowed.

Facts

The petitioner, M/s Shri Shyam Trading Company, filed a writ petition challenging an order dated 30.01.2021 and consequential actions, including a summary of order dated 25.02.2021 in FORM DRC-07 and a summary of show cause notice dated 04.11.2020 in FORM DRC-01, issued by the Assistant Commissioner, Chhattisgarh State Tax. The petitioner contended that only a summary of the show cause notice was served, not the full notice as required by Section 73 of the Chhattisgarh Goods and Services Tax Act, 2017, and Rule 142 of the Chhattisgarh Goods and Services Tax Rules, 2017. This lack of a proper show cause notice prevented the petitioner from filing a reply, leading to the impugned assessment order. The respondent-State argued that the petitioner purchased goods from non-existent companies and claimed bogus Input Tax Credit (ITC), and that the petitioner deliberately failed to reply to the summary show cause notice. The State also pointed to an alternative remedy under Section 107 of the Act.

Key Issues

1. Whether the issuance of only a summary of the show cause notice, without the full notice as required by Section 73 of the Chhattisgarh Goods and Services Tax Act, 2017, and Rule 142 of the Chhattisgarh Goods and Services Tax Rules, 2017, renders the subsequent assessment order invalid? Petitioner's Argument: The petitioner argued that Section 73 of the Act mandates the issuance of a show cause notice, and Rule 142 of the Rules requires this notice to be accompanied by a summary. They contended that receiving only a summary notice, as evidenced by Annexure P/1, prevented them from filing a proper reply, thus vitiating the assessment order. They relied on the provisions of Section 73 and Rule 142. Respondent's Argument: The respondent-State argued that the petitioner had knowledge of serious allegations regarding bogus purchases and ITC claims. They further contended that the petitioner deliberately chose not to file a reply to the summary show cause notice. The State also raised the issue of an efficacious alternative remedy available to the petitioner under Section 107 of the Act.