Case Title | Unity Infraprojects Ltd. vs The State of Jharkhand |
Court | Jharkhand HIgh Court |
Honorable Judges | Justice Aparesh Kumar Singh Justice Deepak Roshan |
Citation | 2022 (07) GSTPanacea 489 HC Jharkhand W.P.(T) No. 985 of 2022 |
Judgment Date | 07-June-2022 |
The writ petition filed sought several reliefs under various sections of the Jharkhand Goods and Services Tax Act, 2017, challenging the legality and procedural correctness of certain orders and notices issued by the respondents.
A. The petition requested the issuance of appropriate writs, orders, or directions affirming that serving a Show Cause Notice as per Section 73(1) of the Act is a prerequisite for issuing any Order under Section 73(9) or other provisions of the Act.
B. It further sought writs of quo warranto or any suitable writ, order, or direction, compelling the respondents to explain under what authority they issued Orders/Summaries of Orders/Garnishee Notices without adhering to Section 73(1) of the Act.
C. Additionally, the petition requested writs, orders, or directions asserting that the absence of a Show Cause Notice under Section 73(1) renders certain Orders and Summaries of Orders, such as those dated 01-11-2021 and the Garnishee Order dated 25-02-2022, void ab initio, thereby nullifying the entire proceedings.
D. Another relief sought was an appropriate writ, order, or direction declaring that issuing an Order under section 74(9) without a mandatory Show Cause Notice violates principles of natural justice, rendering such proceedings void from the beginning.
E. The petition also aimed to quash the Order dated 01-11-2021 purportedly issued under Section 73(9) of the Act and the Summary of Order dated 01-11-2021 issued without a mandatory Show Cause Notice.
F. Finally, the petition requested an appropriate writ, order, or direction declaring the Garnishee Notice issued to Punjab National Bank on 25-02-2022 for recovery of a specific sum as illegal and without legal authority.
In essence, the writ petition challenged the procedural irregularities and legal validity of certain actions taken under the Jharkhand Goods and Services Tax Act, seeking remedies ranging from declaring certain orders null and void to quashing notices issued without proper adherence to legal procedures.
In the legal matter at hand, the petitioner, represented by Mr. Kartik Kurmy, has raised several arguments regarding discrepancies identified in their Goods and Services Tax (GST) returns for the period of April 2018 to March 2019. These discrepancies were noted in Form GST ASMT-10, referenced as 5104 and dated 11.02.2021. The petitioner responded to these findings by submitting a reply in Form GST ASMT-11 on 16.03.2021, presenting various pleas and explanations.
Despite the petitioner’s response, an intimation of tax payable under Section 73(5)/74(5) of the JGST Act, 2017, was issued on 03.04.2021, via Form GST DRC-01A, demanding a total amount including tax, interest, and penalty totaling Rs. 3,84,11,318.04. The petitioner was instructed to pay this amount by 19th April 2021, with the threat of further action under Section 73(1) of the Act if not complied with. Subsequently, the petitioner responded to this communication on 13th April 2021, specifically addressing the allegations and citing legal provisions.
The petitioner argued that the denial of Input Tax Credit (ITC) amounting to Rs. 2,66,26,906/- based on the interpretation of Section 16(4) of the JGST Act is erroneous. They contended that amendments in Rule 61(5) made GSTR-3B a return for the first time within the meaning of Section 39 of the JGST Act, effective from 1st January 2021. Hence, any denial of ITC on this basis would be a misinterpretation of the law.
Furthermore, the petitioner contested the imposition of interest, asserting that without prescribed rules for its computation, such a levy would be impractical. They argued that interest should only accrue post-adjudication of the demand, as the liability is under dispute. Similarly, the petitioner argued that penalties under Section 73(8)/(9) should only apply after proper adjudication and non-payment within 30 days of a show-cause notice issued under Section 73(1). They claimed that no such notice was issued after the initial intimation under DRC-01A.
Despite the petitioner’s assertions, the adjudicating authority proceeded to levy taxes, interest, and penalties through an Adjudication order dated 1st November 2021. This order amounted to Rs. 3,84,11,318.04 and directed the issuance of a summary of the show-cause notice under DRC-07.
In summary, the petitioner, represented by Mr. Kartik Kurmy, has challenged discrepancies in their GST returns and the subsequent demand for taxes, interest, and penalties. They have raised legal arguments regarding the interpretation of relevant provisions and contested the procedural aspects of the tax assessment and penalty imposition.
The learned counsel representing the petitioner has raised several arguments challenging the validity of an adjudication order. They contend that the order suffers from a lack of compliance with the principles of natural justice and the prescribed procedure under Section 73 of the Act. To support this claim, they cite two court judgments: one from the case of M/s NKAS Pvt. Ltd v. State of Jharkhand (reported in 2022 VIL 139 JHR) and another from R.K. Transport Pvt. Ltd. v. The Union of India (reported in 2022(2) TMI 1051). The petitioner’s counsel highlights that the Department issued a garnishee notice (Form GST DRC-13) to the petitioner’s bank, Punjab National Bank, demanding payment of a specified sum to the Government under Section 79(1)(c) of the Act. Failure to comply with this notice would label the bank as a defaulter, subject to legal consequences under the Act and Rules.
Furthermore, the petitioner’s counsel relies on a judgment from a Coordinate Bench of the Court, specifically the case of Mahadeo Construction Company v. Union of India & Ors. (W.P.(T) No.3517 of 2019, dated 21st April 2020), where it was established that if an assessee disputes the levy of interest, no recovery proceedings under Section 79 of the Act can be initiated without first conducting adjudication proceedings. They argue that in the present case, no show-cause notice was issued under Section 73(1) of the Act, and the petitioner denies receiving any summary of such notice. The counsel emphasizes that the summary of the show-cause notice was issued in FORM GST DRC-01A without rejecting the petitioner’s reply furnished in FORM GST ASMT-11. Consequently, they assert that the impugned order dated 1st November 2021, along with its summary contained in GST DRC-07 (Annexure-6) of the same date and the Garnishee notice issued in FORM GST DRC-13, should be quashed.
Moreover, the petitioner’s counsel argues that since the tax period in question relates to 2018-19, and the annual return deadline was extended until March 2020, the limitation for initiating fresh proceedings and passing orders under Section 73(2) has not expired. Thus, they suggest that the respondents have the option to initiate fresh proceedings in accordance with the law, if deemed appropriate.
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