Show Cause Notice Containing "NA" In Column Of Date, Time, Venue Of Personal Hearing: Jharkhand High Court Quashes Adjudication Order

The division bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has observed that the adjudication order was not in accordance with the procedure prescribed in law. The order deserves to be quashed on the grounds of non-compliance with the statutory provisions of the JGST Act and for non-compliance with the principle of natural justice.

The petitioner/assessee is a registered dealer. The assessee is in the business of trading Jaggary, Mahua, and Krana goods. An inspection was carried out on the premises of the petitioner by a team of officials. An inspection report was prepared by recording that there were certain discrepancies between the GSTR-3B return and the auto-populated GSTR-2A return.

The respondent/department, in the exercise of power under section 70 (1) of the JGST Act, directed the petitioner to appear and produce relevant books of accounts. The petitioner duly appeared and participated in the inquiry proceeding by producing relevant documents.

In terms of Section 70 of the JGST Act, summons were issued to the petitioner with a direction to appear on April 3rd, 2019 along with the documents indicated in the summons. Pursuant to the summons, the petitioner duly appeared and filed the requisite documents before the respondent. The summary show cause notice was issued to the petitioner on Form GST DRC-01. Pursuant to the issuance of Form GST DRC-01, immediately, without issuing show-cause and notice of personal hearing, an adjudication order under Section 73 (1) of the JGST Act was passed against the petitioner.

The petitioner contended that no show cause notice, summary of show cause notice, adjudication order, or summary of order was ever served to the petitioner. All of a sudden, the bank attachment notice contained in GST DRC-13 under Section 79(1)(c) was issued to the banker of the petitioner, by attaching the bank account of the petitioner pursuant to Form GST DRC-07. It was only after the issuance of Form GST DRC-13 that the petitioner came to know about the adjudication proceeding and the orders passed by the respondent.

The petitioner submitted that the department, without serving a copy of show cause notice and without affording an opportunity to be heard, passed the adjudication orders and consequently issued Form GST DRC-07, a summary of orders, just in order to fasten the huge liability of tax, interest, and penalty. The assessment order was non-speaking and without application of judicial mind.

The petitioner contended that Section 16(2) of the GST Act nowhere stipulates that a dealer would not be entitled to claim ITC in its GSTR-3B return of an amount to the extent which has not been reflected in the GSTR-2A statement.

The respondent submitted that the petitioner appeared before the adjudicating authority and furnished the requisite documents, and only thereafter, the order had been passed in both these writ applications. If at all, the petitioner has any grievance, he may file an appeal before the appellate authority.

The court held that the statutory requirements as enshrined under Sections 73 and 75 of the JGST Act have not been followed and, as a matter of fact, principles of natural justice have also not been followed.

Case Title: M/s. Om Prakash Store Versus The State of Jharkhand

Case No: W.P. (T) No. 1526 of 2022

Dated: 18.08.2022

Counsel For Petitioner: Advocates Sumeet Gadodia, Shilpi Sandil Gadodia

Counsel For Respondent: Advocate ​​P.A.S. Pati

Click Here To Read/Download Order