M/S Tanishka International vs. State Of U.P. And 2 Others
Held
The Court allowed the writ petition. It held that the initiation of proceedings against the petitioner was fundamentally flawed due to the admitted non-issuance of the notice in Part A of FORM GST DRC-01A, as required by Rule 142(1A) of the Rules prior to its amendment. The Court reasoned that this notice is crucial for communicating the ascertained tax, interest, and penalties, and any subsequent reminders cannot cure this inherent defect in the initiation of proceedings. The Court followed the precedents set by the Delhi High Court in Gulati Enterprises and this Court in M/s Skyline Automation Industries, where similar procedural lapses led to the quashing of impugned show cause notices and remittal of matters for fresh proceedings. The impugned order dated April 3, 2021, was quashed. The respondents were granted liberty to initiate fresh proceedings against the petitioner in accordance with the law.
Facts
The petitioner, M/s Tanishka International, challenged an order dated April 3, 2021 (DRC-07) passed by respondent No. 2 under Section 74(9) of the Central Goods and Service Tax Act, 2017. The petitioner argued that the proceedings were initiated without issuing a mandatory notice in Part A of FORM GST DRC-01A, as required by Rule 142(1A) of the Central Goods and Service Tax Rules, 2017, prior to its amendment on October 15, 2020. This omission, the petitioner contended, deprived them of a fair opportunity to respond and rendered the subsequent proceedings without jurisdiction. The respondents did not dispute the non-issuance of the DRC-01A notice but argued that subsequent reminders provided a fair hearing opportunity and that the impugned order was appealable under Section 107 of the Act.
Key Issues
1. Whether the proceedings initiated against the petitioner under Section 74 of the Central Goods and Service Tax Act, 2017, are without jurisdiction due to the non-issuance of a notice in Part A of FORM GST DRC-01A, as mandated by Rule 142(1A) of the Central Goods and Service Tax Rules, 2017, prior to its amendment on October 15, 2020? Petitioner's contention: The petitioner argued that the non-issuance of the notice in Part A of FORM GST DRC-01A, which is a prerequisite for passing an order under Section 74, vitiates the entire proceedings. They relied on the Delhi High Court's judgment in Gulati Enterprises v. Central Board of Indirect Taxes and Customs & others and this Court's order in M/s Skyline Automation Industries v. State of U.P. and another. Respondents' contention: The respondents conceded that the notice in Part A of FORM GST DRC-01A was not issued. However, they contended that subsequent reminders afforded the petitioner a fair opportunity to present their case, and that the impugned order was appealable under Section 107 of the Act.
Sections Cited
Section 74(9), Rule 142(1A), Section 107
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Challenge in the present writ petition is to the order dated April 3, 2021 (DRC-07) Annexure-2 to the writ petition passed by respondent No.2 under Section 74(9) of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as "the Act").
The argument raised by the learned counsel for the petitioner is that in terms of the provisions of Rule 142(1A) of the Central Goods and Service Tax Rules, 2017 (hereinafter referred to as "the Rules) as existing at the time of initiation of the proceedings against the petitioner before it was amended on October 15, 2020, before passing any order under Section 74 of the Act, a show cause notice in Part A of FORM GST DRC-01A is required to be issued. It is only thereafter that the jurisdiction is vested with the Competent Authority to pass order. In the case in hand, notice in Part A of FORM GST DRC-01A having not been issued, any subsequent proceeding will be without jurisdiction as the petitioner did not have fair opportunity to respond.
In support of the argument, reliance was placed on a Division Bench judgment of Delhi High Court in Gul
The judgment continues below.
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