Juhi Industries (P).Ltd. vs State Of Jharkhand

The case at hand involves two writ petitions, W.P. (T) No.1991 of 2021 and W.P. (T) No.1984 of 2021, which are being heard together due to their common issues and because they concern the same assessee but for different periods.

W.P. (T) No.1991 of 2021 pertains to the period from July 2017 to March 2018 (Assessment Year 2017-18), while W.P. (T) No.1984 of 2021 relates to the period from April 2018 to August 31, 2018 (Assessment Year 2018-19).

The background of the case involves a search conducted on 13-08-2018 at the premises of the petitioner under Section 67 of the JGST (Jharkhand Goods and Services Tax) Act. The search was prompted by irregular claims of input tax credit, particularly concerning the allegation that the petitioner claimed input tax credit without making payment of the value and tax of the inputs to the supplier within six months, which violates the 2nd/3rd proviso to Section 16(2) of the JGST Act. Additionally, it was found that a credit of Rs. 27 lakh (out of the total Rs. 19.43 crore, constituting 1%) was not transported in heavy vehicles as per the vehicle numbers.

In the case of W.P. (T) No.1984 of 2021, the grounds for search were that the petitioner made purchases only from one supplier, without providing proof of payment. Furthermore, upon physical verification, a discrepancy was found between the maintained stock and the actual stock.

The court, upon considering both petitions together, proceeded to hear and dispose of them through a common order.

These two writ applications, W.P. (T) No.1991 of 2021 and W.P. (T) No.1984 of 2021, are interconnected as they concern the same assessee for different periods. W.P. (T) No.1991 of 2021 addresses the period from July 2017 to March 2018 (AY-2017-18), while W.P. (T) No.1984 of 2021 pertains to the period from April 2018 to August 31, 2018 (AY-2018-19).

The case revolves around a search conducted on August 13, 2018, at the petitioner’s premises under Section 67 of the JGST Act. The search was prompted by irregularities in claiming input tax credit, particularly for not making payments to suppliers within six months as mandated by the provisions of the JGST Act. Additionally, discrepancies were found regarding the transportation of certain goods via heavy vehicles, as well as differences in stock upon physical verification compared to the records.

Mr. Kartik Kurmi, along with Mr. N. K. Pasari and Ms. Sidhi Jalan, representing the petitioner, argues that the proceedings commenced with summary show-cause notices issued on September 14, 2018, under Section 74(1) of the JGST Act. The petitioner responded to these notices on October 11, 2018, explaining the legality of their input tax credit claims. However, subsequent to this, the respondent No.4 passed two separate orders on February 25, 2019, confirming tax demands, interest, and penalties, and issued a Summary of Order on February 28, 2019.

The petitioner then sought rectification of certain errors by filing separate applications before respondent No.2 under Section 161 of the JGST Act on June 2, 2019. Respondent No.2 subsequently issued rectification orders on March 3, 2021, for both periods mentioned in the applications and issued demand notices on the same date.

It is argued that no show-cause notice under Section 74(1) was issued to the petitioner, which is a mandatory requirement. The issuance of Form DRC 01 is not considered a substitute for the show-cause notice under Section 74(1). Therefore, the entire proceeding in both cases is deemed without jurisdiction. The absence of proper issuance of show-cause notices renders subsequent proceedings and orders unsustainable, as they are contrary to the provisions of the JGST Act.

Additionally, it is contended that there is no estoppel. This legal argument implies that the respondent cannot rely on the petitioner’s actions or lack thereof to justify the irregularities in the proceedings.

In conclusion, the petitioner seeks relief on the grounds of procedural irregularities, arguing that the entire legal process initiated against them lacks jurisdiction and is therefore unsustainable.

The present case involves two writ petitions, W.P. (T) No.1991 of 2021 and W.P. (T) No.1984 of 2021, which were heard together and disposed of by a common order due to a common issue concerning the same assessee for different periods.

W.P. (T) No.1991 of 2021 pertains to the period from July 2017 to March 2018 (AY-2017-18), while W.P. (T) No.1984 of 2021 relates to the period from April 2018 to August 31, 2018 (AY-2018-19). The facts of the case reveal that a search was conducted on August 13, 2018, under Section 67 of the JGST Act at the premises of the petitioner due to irregular claims of input tax credit.

In W.P. (T) No.1991/2021, the petitioner was alleged to have claimed input tax credit without making the required payment of value and tax to the supplier within six months, in violation of Section 16(2) of the JGST Act. Additionally, discrepancies were found regarding the transportation of goods. In W.P. (T) No.1984/2021, the petitioner had made purchases from a single supplier without sufficient proof of payment, and physical verification revealed discrepancies in stock.

Mr. Kartik Kurmi, representing the petitioner, argued that the proceedings initiated against them lacked jurisdiction as no show cause notice under Section 74(1) of the JGST Act was issued. He contended that the issuance of Form DRC-01 was not a substitute for the mandatory show cause notice, rendering the entire proceeding invalid. He emphasized the mandatory nature of Section 74(1) and cited relevant case law to support his argument.

On the other hand, Mr. Sachin Kumar, representing the respondent, countered that a summary of the show cause notice along with the gist of accusation was indeed issued to the petitioner, fulfilling the requirements of Section 74(1). He highlighted that the petitioner had responded to this notice, indicating compliance with adjudication processes. He further asserted that principles of natural justice were followed, as evidenced by the supply of relevant documents to the petitioner and consideration of their representations before passing the impugned order.

Mr. Kumar also mentioned that the petitioner had filed applications for rectification of errors, which were duly considered, leading to a reduction in the petitioner’s liability. Ultimately, he argued that the respondent had followed due process, and the impugned orders were valid.

In summary, the main contention in this case revolves around the validity of the proceedings initiated against the petitioner, with the petitioner arguing lack of jurisdiction due to the absence of a mandatory show cause notice, while the respondent maintains that due process was followed. The court will have to adjudicate on these arguments to determine the validity of the impugned orders.

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