Krit Kunal Dhawan vs. The State Of Assam And 2 Ors

Held

The Court held that the ends of justice would be met by providing the petitioner an opportunity to appear before the Joint Commissioner of State Taxes, Guwahati, with all relevant materials to satisfy the authorities regarding the ITC utilized. The Court noted that the Form GST DRC-01 was issued because the petitioner had not provided appropriate material and documents during the investigation, leading the authorities to believe that dubious ITC was relied upon. The Court directed the petitioner to appear on 08.11.2021 at 11:00 am. Upon appearance, the authority was to grant due audience, consider all produced materials and contentions, and then pass a reasoned order. The Form GST DRC-01 notices were to be kept in abeyance until the reasoned order was passed. If the order favored the petitioner, the DRC-01 notices would cease to be effective. If against the petitioner, a fresh DRC-01 could be issued with adequate time granted.

Facts

The petitioner, Krit Kunal Dhawan, carrying on business as Eco Fuel Industries, challenged two communications dated 08.10.2021 issued by the respondent authorities. These communications, in the form of GST DRC-01 notices, alleged that the petitioner had utilized Input Tax Credit (ITC) from dubious firms involved in bill trading and passing on fake ITC without actual movement of goods. The notices sought reversal of ITC with interest and penalty under the Assam GST Act, 2017. The petitioner contended that the notices were based on media reports and that the investigation process was flawed. The respondents stated that a summon was issued on 10.09.2021, the petitioner appeared on 23.09.2021 and requested time, but failed to appear on the deferred date of 30.09.2021, leading to the issuance of the DRC-01 notice.

Key Issues

1. Whether the Form GST DRC-01 notices dated 08.10.2021, issued by the respondent authorities, were validly issued based on media reports and the investigation process, particularly concerning the utilization of ITC from alleged dubious firms, under the Assam GST Act, 2017? Petitioner's Contentions: The petitioner argued that the notices could not have been issued solely on the basis of print and electronic media reports, relying on Supreme Court decisions. The petitioner also claimed to be ready with relevant materials on 23.09.2021 itself to satisfy the authorities. Revenue's Contentions: The respondents contended that the notices were issued after an investigation revealed the utilization of ITC from dubious firms, as indicated by specific GSTN numbers. They also presented a communication detailing that a summon was issued, the petitioner appeared and requested time, but subsequently failed to appear on the deferred date, leading to the show-cause notice.