M/S Yamuna Trading Corporation vs. The Commissioner

Facts

The petitioner, M/s Yamuna Trading Corporation, challenged an order dated 07.08.2020, which was described as a summary of a show-cause notice issued under the CGST Act and Rules. The petitioner contended that this summary was issued without a proper show-cause notice being served, as mandated by Section 74(1) of the CGST Act, 2017. They asserted that they never received the original show-cause notice, thus having no opportunity to file a reply or objections. The State Counsel acknowledged the statutory requirement for issuing and serving a show-cause notice.

Held

The Court held that the matter did not require further adjudication at that stage. It accepted the submission of the State Counsel that the statutory requirement of issuing and serving a show-cause notice under Section 74(1) of the CGST Act, 2017, would be complied with. The Court reasoned that since the petitioner's primary grievance was the non-issuance or non-service of the show-cause notice, remitting the matter back to the respondent to ensure compliance with this procedural requirement would address the issue. The Court directed the respondent no. 2 to ensure that a show-cause notice under Section 74(1) is duly issued and served upon the petitioner, granting them reasonable time to respond. The Court further directed that the respondents shall not pursue the summary of the show-cause notice dated 07.08.2020 in the interim. No specific issue was left undecided, as the Court's direction aimed to rectify the procedural lapse.

Key Issues

1. Whether the summary of a show-cause notice issued on 07.08.2020 is valid when a proper show-cause notice under Section 74(1) of the CGST Act, 2017, has allegedly not been issued or served upon the petitioner? Petitioner's argument: The petitioner argued that the summary of the show-cause notice was illegal and unsustainable as it was issued in contravention of Section 74(1) of the CGST Act, 2017, and the associated Rules. They contended that the mandatory procedure requires the issuance and service of a show-cause notice first, followed by consideration of the petitioner's reply before any decision is taken. Since the original show-cause notice was not served, the petitioner had no opportunity to respond, making the subsequent summary invalid. Revenue/State's argument: The State Counsel did not dispute the statutory requirement under Section 74(1) of the Act. They submitted that if a show-cause notice had not been issued, it would be issued, and if it had been issued, it would be ensured that it was duly served upon the petitioner.