M/S Microteck Shivalik Industries PVT LTD vs. The State Of Hp And Others

Held

The Court held that the impugned order dated 20.06.2023 was indeed flawed. The learned Advocate General for the respondents conceded that the order was erroneously drafted and intended to be a Show Cause Notice. Therefore, the Court set aside the impugned order. It directed that the said order be treated as a Show Cause Notice issued to the petitioner. The petitioner was granted four weeks' time to file a reply. Upon receipt of the reply, the second respondent was directed to offer a personal hearing to the petitioner and thereafter pass a reasoned order in accordance with the law and communicate it to the petitioner. The ratio of this decision is that an order that purports to be a summary of a show cause notice but prematurely determines liability and directs payment, without a proper prior show cause notice, violates natural justice and must be treated as a show cause notice itself, affording the assessee an opportunity to respond.

Facts

The petitioner, M/s Microtek Shivalik Industries Private Limited, assailed an order dated 20.06.2023, issued in FORM GST DRC-01 by the second respondent, purportedly under Section 74(9) of the HPGST/CGST Act, 2017. While the order stated it was a "summary of a Show Cause Notice," it also contained a table on page 4 indicating a determined tax liability and directed the petitioner to pay it, followed by a sentence allowing objections by 19.07.2023. The petitioner contended that no prior show cause notice, as mandated by Section 74(1) of the HPGST Act, was issued, thus violating the principle of natural justice.

Key Issues

1. Whether the impugned order dated 20.06.2023, issued by the second respondent, is a valid Show Cause Notice under Section 74(1) of the HPGST/CGST Act, 2017, or a final determination of tax liability in violation of natural justice? Petitioner's contention: The impugned order is in violation of the principle of natural justice as no prior show cause notice was issued as mandated by Section 74(1) of the HPGST Act. Revenue's contention: The second respondent intended to issue only a Show Cause Notice but erroneously mentioned a determination of tax liability, penalty, and interest. The impugned order should be treated as a Show Cause Notice, and the petitioner should be granted an opportunity to file a reply, after which a reasoned order will be passed.