Case Title | Om Prakash Store vs The State of Jharkhand, Deputy Commissioner/ Assistant Commissioner of State Tax/State Tax Officer of State Tax |
Court | Jharkhand High Court |
Honorable Judges | Justice Aparesh Kumar Singh and Justice Deepak Roshan |
Citation | 2022 (8) GSTPanacea 119 HC Jharkhand W.P. (T) No. 1526/1527 of 2022 |
Judgement Date | 18-August-2022 |
Council for Petitioner | Mr. Sumeet Gadodia and Mrs. Shilpi Sandil Gadodia |
Council for Respondent | Mr. P.A.S. Pati |
The High Court of Jharkhand, Ranchi bench of Justices Aparesh Kumar Singh and Deepak Roshan, has held that, the adjudication order in both these applications dated 12.09.2019 and consequential notice of demand as contained dated 18.09.2019 are, hereby, quashed and set aside.
FACTS OF THE CASE
facts of the case is that the petitioner is a registered dealer and is primarily engaged in the business of trading of Jaggary, Mahua and Krana Goods. An inspection was carried out in the premises of petitioner by a team of officials of State Tax Department, Jharkhand and pursuant thereto; an inspection report was prepared by recording, inter alia, that for the period from 2017-18 and 2018-19 (April, 2018 to June, 2019), there were certain discrepancies in GSTR-3B return and auto populated GSTR-2A return. Pursuant to the inspection, respondent-authorities in exercise of power under section 70 (1) of the JGST Act, directed the petitioner to appear and produce relevant books of accounts on 05.10.2018. The representative of the petitioner duly appeared and participated in the enquiry proceeding by producing relevant documents. However, in terms of Section 70 of the JGST Act, summons were issued to the petitioner with a direction to appear on 3rd April, 2019 along with documents indicated in the summons. Pursuant to the aforesaid summons, petitioner duly appeared and filed requisites documents before Respondent- authorities. Thereafter, summary show cause notice dated 15.05.2019 & dated 16.05.2019 was issued to the petitioner. Pursuant to issuance of Form GST DRC-01, straightway, without issuing show-cause and notice of personal hearing, adjudication order under Section 73 (1) of the JGST Act was passed against the petitioner.
The specific case of the petitioner is that no show cause notice, summary of show cause notice, adjudication order and summary of order was ever served to the petitioner. As a matter of fact, all of a sudden the bank attachment notice dated 08.09.2021 was issued to the banker of the petitioner. Petitioner requested respondent No.2 to recall the notice dated 08.09.2021. However, State Tax Department did not reply to the said notice. However, on 30.09.2021, petitioner also applied for certified copy of adjudication order which was supplied to petitioner on 06.10.2021. Similarly, petitioner also applied for certified copy of summary of show cause notice and certified copy of summary of order (DRC-07) on 23.11.2021 which was supplied to petitioner on 06.01.2022 along with the certified copies of purported show cause notice.
During the pendency of the writ application, respondent’s State counsel has furnished the copy of entire order-sheet including the show cause notice issued under Section 73 of the JVAT Act. However, the said show cause notice is nothing but reiteration of provisions of Section 73 of the JGST Act. In fact, date, time and venue of personal hearing was indicated as ‘NA’ in the show cause notice. Learned counsel for the petitioner while assailing the impugned orders submit that the respondent No.3 without serving copy of show cause notice and without affording opportunity of being heard passed the adjudication orders and consequent thereto being summary of orders just in order to fasten huge liability of tax, interest and penalty. He further submits that for the first time petitioner came to know about the adjudication order when his bank account has been attached by the respondent No.4.The petitioner further stated that the impugned adjudication order has been passed ex-parte and no opportunity of personal hearing has been granted to the petitioner. As a matter of fact, the impugned assessment order is also non-speaking order and without application of judicial mind by respondent No.3. The adjudication orders have been passed in utter defiance of the provision of JGST Act more particularly section 73 and 75 of the Act.
Learned counsel contended that the learned adjudicating authority failed to appreciate that no proceedings for denial of ITC can be initiated merely because there is difference of the amount of ITC as claimed in GSTR-3B vis-à-vis GSTR-2A statement. Relying upon the aforesaid contention on merit and more particularly on the ground of non-compliance of statutory provision and settled principle of natural justice learned counsel submits that both the impugned adjudication orders should be quashed and set aside and the matter may be remitted back to the concerned authority.
Learned counsel for the respondent-State raised mainly two points:
(i) The writ petition is not maintainable in the light of availability of alternative remedy of filing an appeal under Section 107 of JGST Act, 2017.
(ii) The opportunity of hearing in terms of provision of JGST Act was duly provided to the petitioner but the petitioner did not appear and therefore, the impugned order has been passed.
Learned counsel for the respondent-State contended that the petitioner appeared before the adjudicating authority and furnished requisite documents and only thereafter, the impugned order has been passed in both these writ applications. He further contended that if at all the petitioner is having any grievance; he may file appeal before the appellate authority
COURT HELD
The Court held that the show cause notice under Section 73 which was issued to the petitioner; in the column date, time and venue of personal hearing, it was mentioned “NA” which clearly goes to show that the said show cause notice issued was negligently issued and no date, time and venue was mentioned and straightway adjudication order under Section 73 of JGST Act was passed and also summary of order dated 18.09.2019 was issued. The Court further held that Even after going through the entire order sheet it clearly transpires that on 16.05.2019 there was an order for issuance of Show cause notice but after that there was no mention of issuance of Summary order; rather all of a sudden, 08.09.2021, there was a direction to issue adjudicating order. This clearly goes to show that there is serious discrepancy and incongruity in the assessment proceedings, inasmuch as, there is no whisper of issuing Summary order. Thus, it clearly transpires that a proper show cause notice under Section 73 (1) of the JGST Act and proper opportunity of hearing was not afforded to the petitioner before the adjudication order was passed covering the tax period from July, 2017 to March, 2018 and April 2018 to June, 2018.
The Court took the reference of the case M/s NKAS Services Private Limited versus The State of Jharkhand & Ors where the court stated the following:
- The concept of reasonable opportunity includes various safeguards and one of them is to afford opportunity to the person to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based.
- We are of the considered view that the impugned showcase notice as contained in Annexure-1 does not fulfill the ingredients of a proper show-cause notice and thus amounts to violation of principles of natural justice, the challenge is entertainable in exercise of writ jurisdiction of this Court. Accordingly, the impugned notice at Annexure-1 and the summary of show-cause notice at Annexure-2 in Form GST DRC-01 are quashed. However, since this Court has not gone into the merits of the challenge, respondents are at liberty to initiate fresh proceedings from the same stage in accordance with law within a period of four weeks from today.
In view of the aforesaid decision and also looking to the entire facts and circumstances of the case it clearly transpires that the statutory requirements as enshrined under Section 73 and 75 of the JGST Act has not been followed and as a matter of fact principles of natural justice has also not been followed and thus, both these writ applications are maintainable. We hold that the impugned adjudication order in both these writ application are not in accordance with the procedure prescribed in law and deserves to be quashed and set aside on the ground of non-compliance of statutory provisions of the JGST Act and for noncompliance of principle of natural justice.
Consequently, adjudication order in both these applications dated 12.09.2019 and consequential notice of demand dated 18.09.2019 are, hereby, quashed and set aside. The matter is remitted back to the adjudicating authority to issue a fresh show cause notice and after giving due opportunity to the petitioner pass an order afresh. So far as 10 % deposit of the tax amount is concerned; after issuance of fresh adjudication order the petitioner may file for refund of the claim if fresh adjudication order is not against him and /or the said amount shall be adjusted from his future tax liability. Both these writ applications are allowed.
ANALYSIS OF THE JUDGEMENT
By noticing the above order we analyse that the concept of reasonable opportunity includes various safeguards and one of them is to afford opportunity to the person to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based. It is also true that acts of fraud or suppression are to be specifically pleaded so that it is clear and explicit to the noticee to reply thereto effectively. If the allegations in the show-cause notice are not specific and are on the contrary, vague, lack details and/or unintelligible i.e. its sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show-cause notice. In order to proceed under the provisions of Section 74 of the Act, the specific ingredients enumerated thereunder have to be clearly asserted in the notice so that the noticee has an opportunity to explain and defend himself.
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