M/S Tanishka International vs. State Of U.P. And 2 Others

Held

The Court allowed the writ petition, quashing the impugned order dated February 23, 2021. The Court held that the admitted non-issuance of a notice in Part A of FORM GST DRC-01A, as provided for under Rule 142(1A) of the Rules prior to its amendment, was a fatal flaw. This notice is crucial for communicating the ascertained tax, interest, and penalties, and its absence inherently defects the proceedings. The Court reasoned that subsequent reminders could not cure this fundamental defect. The Court followed the precedents set by the Delhi High Court in Gulati Enterprises' case and this Court in M/s Skyline Automation Industries' case, where similar orders were set aside and matters remitted for fresh proceedings in accordance with the law. The respondents were granted liberty to initiate fresh proceedings against the petitioner in accordance with law.

Facts

The petitioner, M/s Tanishka International, challenged an order dated February 23, 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 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 opportunity, and the impugned order was appealable under Section 107 of the Act.

Key Issues

1. Whether the failure to issue 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 (as existing prior to October 15, 2020), renders subsequent proceedings under Section 74 of the Act void for lack of jurisdiction and denial of a fair opportunity to respond? Petitioner's Arguments: The petitioner contended that the issuance of a notice in Part A of FORM GST DRC-01A was a prerequisite for passing any order under Section 74 of the Act. They argued that this notice provides the details of tax, interest, and penalties ascertained by the officer, and its absence vitiates the entire proceeding, making it without jurisdiction. Reliance was placed 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' Arguments: The respondents conceded that the notice in Part A of FORM GST DRC-01A was not issued. However, they argued that subsequent reminders had provided the petitioner with a fair opportunity to present their case, which the petitioner failed to avail. They also submitted that the impugned order was appealable under Section 107 of the Act.