Case Title | NKAS SERVICES PRIVATE LIMITED VS THE STATE OF JHARKHAND |
Court | Jharkhand High Court |
Honorable Judges | JUSTICE APARESH KUMAR SINGH JUSTICE DEEPAK ROSHAN |
Citation | 2022 (02) GSTPanacea 487 HC Jharkhand W.P.(T) No. 2659 of 2021 |
Judgment Date | 09-February-2022 |
The present challenge pertains to two show cause notices issued by the respondent no.3 under the Jharkhand Goods and Services Tax (JGST) Act, 2017. The first notice, dated 14.06.2021 (Annexure-1), was issued under Section 73 of the JGST Act, while the second notice, also dated 14.06.2021, was summarized in Form DRC-01 (Annexure-2) under Rule 142(1)(a) of the JGST Rules, 2017. These notices were issued subsequent to the withdrawal of a previous notice dated 07.06.2021 under Section 73 of the JGST Act.
Annexure-1, issued by the State Tax Officer, Godda:Dumka:Jharkhand, directed NKAS SERVICES PRIVATE LIMITED to furnish a reply along with supporting documents regarding alleged tax discrepancies. It stated that the company may appear for a personal hearing and highlighted the liabilities including tax, interest, and penalties.
Annexure-2, Form DRC-01, provided a summary of the show cause notice under Section 73 of the JGST Act. It alleged that the company had received payments from the government treasury for completed or partly completed works contract services, which were not fully reflected in their filed returns.
Mr. Kartik Kurmy, counsel for the petitioner, argued against these notices. He contended that Annexure-1 lacked essential details required for a proper show cause notice, as it failed to specify the contravention committed by the petitioner. He also criticized the summary provided in Annexure-2, stating that it did not contain specific facts and allegations of tax evasion.
Furthermore, the counsel argued that the tax authorities’ reliance on electronic formats for notices led to insufficient detailing of charges. He cited Section 75(7) to emphasize that demands should not exceed those specified in the notice, which was not the case here.
To support his arguments, counsel referred to legal precedents such as Gorkha Security Services v. Government (NCT of Delhi) and Metal Forging & Another v. Union of India & Others, highlighting the importance of a proper show cause notice containing detailed facts and charges.
In conclusion, the petitioner sought to invalidate the impugned notices, asserting that they did not meet the necessary criteria for a lawful show cause notice, thereby denying the petitioner a fair opportunity to defend themselves.
The impugned notice, subject to legal challenge, has been issued in response to the defense presented by the respondents in their counter affidavit. The petitioner’s counsel, in addressing this defense, has cited a judgment from the Supreme Court in Union of India v. Bharti Airtel Ltd. (2021), emphasizing that while the GSTN portal facilitates information exchange, it cannot negate the necessity of a proper show cause notice. The petitioner argues that the respondents’ reliance on a prescribed online format (DRC-01) for issuing a summary of the show cause notice does not replace the essential elements required for a valid notice.
Furthermore, the petitioner’s counsel draws attention to a previous ruling by the court in a similar case involving the same petitioner, highlighting the importance of a clear and specific show cause notice. It is emphasized that a vague notice denies the petitioner the opportunity to adequately defend themselves and could lead to ambiguous outcomes, contrary to the interests of both the petitioner and the revenue authorities. The counsel underscores that no tax, interest, or penalty can be imposed on grounds not specified in the notice, as per Section 75(7) of the JGST Act. Thus, the impugned notice is argued to lack the necessary components of a proper show cause notice and should be nullified.
In response, Mr. P.A.S. Pati, representing the State, has filed a counter affidavit defending the impugned notices. He contends that the notices, including the summary of the show cause notice, have been issued in compliance with the JGST Act, 2017, and its rules. Mr. Pati points out that the summary explicitly states the alleged violations committed by the petitioner, particularly regarding undisclosed payments leading to tax evasion. He argues that the summary of the show cause notice adequately outlines the petitioner’s infractions and aligns with Section 73 of the JGST Act.
The legal dispute thus revolves around the adequacy of the notice issued by the authorities. While the petitioner asserts that the notice lacks essential elements required by law, the State maintains that it adheres to statutory provisions. The resolution of this matter will likely hinge on the court’s interpretation of relevant legal principles and precedents.
The summary pertains to a legal case involving the petitioner and respondent concerning actions under the JGST Act (presumably the Goods and Services Tax Act in a specific jurisdiction). The petitioner sought to justify their actions by referencing the period from April 2020 to October 2020, but the respondent argued against this, emphasizing the importance of proper discharge of liabilities as per various returns and certificates such as GSTR-3B, GSTR-7, and GSTR-7A.
The respondent’s counsel pointed out that the show cause notice issued by the proper officer through the online portal of the GSTN (Goods and Services Tax Network) adheres to prescribed formats, particularly DRC-01. The format ensures that the notice is standardized, allowing the proper officer to outline violations and charges against the petitioner for alleged tax evasion. They further argued that Form GST ASMT-10, as per Section 61 of the JGST Act and Rule 99 of the JGST Rule, is not a prerequisite for the proper officer to raise jurisdiction under Section 73.
In response to the petitioner’s reference to a previous court decision (W.P.(T) No. 2444 of 2021), the respondent’s counsel clarified that the decision was specific to a show cause notice issued under Section 74 of the JGST Act, where charges related to fraud or willful misstatement were required to be specifically alleged. However, in the present case, the notice is issued under Section 73, where such charges are not mandatory.
Overall, the respondent’s counsel argued that the show cause notice was issued in accordance with the prescribed procedures under the JGST Act, and the petitioner’s attempt to justify their actions based on a specific timeframe is not valid.
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