The Gauhati High court has held that the Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act as well as the State Act.
The bench of Justice Soumitra Saikia has observed that irrespective of issuance of the Summary of the Show Cause Notice, the Proper Officer has to issue a Show Cause Notice to put the provision of Section 73 into motion. The Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act or State Act cannot be confused with the Statement of the determination of tax to be issued in terms with Section 73 (3) of the Central Act or the State Act.
The bench noted that the attachment to the Summary of Show Cause Notice in GST DRC-01 is only the Statement of the determination of tax in terms with Section 73 (3). The Statement of determination of tax cannot substitute the requirement for issuance of the Show Cause Notice by the Proper Officer in terms with Section 73 (1) of the Central or the State Act.
The bench held that initiation of the proceedings under Section 73 against the petitioners without the Show Cause Notice is bad in law and interfered with.
The petitioner was issued a Summary of the Show Cause Notice dated 29.09.2023 in the GST DRC-01. In the Summary of the Show Cause Notice, it was mentioned that the Show Cause Notice was attached. Along with the said Summary of the Show Cause Notice, there was an attachment to the determination of tax.
The petitioner did not reply to the Show Cause Notice in view of the fact that there was no Show Cause Notice attached to the Summary of the Show Cause Notice. Pursuant thereto, the Order dated 29.12.2023 was issued in GST DRC-07.
To the Order uploaded in GST DRC- 07, there was an attachment stating the manner in which the determination was made. The reason assigned for passing of the said order was that the taxpayer had not replied or contested the notice, and as such, had agreed with the terms of the notice.
The attachments to both the GST DRC-01 as well as the GST DRC-07 did not contain any signature of the Proper Officer. It is the grievance of the petitioner that the petitioner was not provided with the opportunity of hearing as provided under Section 75 (4) of the CGST/AGST Act, 2017 before passing of the order.
The court noted that the department was under the impression that issuance of attachment of the determination of tax which was attached to the Summary of the Show Cause Notice would constitute a valid Show Cause Notice.
The court, while setting aside the order, granted liberty to the department to initiate de novo proceedings under Section 73, if deemed fit for the relevant financial year in question.
Case Details
Case Title: Shri Shambhu Prasad Versus The State Of Assam And Ors
Case No.: Case No. : WP(C)/6807/2024
Date: 08.01.2025
Counsel For Petitioner: R S Mishra, N Parasar, A K Gupta
Counsel For Respondent: SC, Finance And Taxation
