Gauhati High Court
Construction Catalysers Private … vs The State Of Assam And 2 Ors on 26 September, 2024
Author: Devashis Baruah
Bench: Devashis Baruah
Page No.# 1/28
GAHC010152562024
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/3912/2024
CONSTRUCTION CATALYSERS PRIVATE LIMITED
HAVING ITS REGISTERED OFFICE AT VEDH, 484/37, MITRAMANDAL
COLONY, PARVATI, PUNE, MAHARASHTRA INDIA- 411009 REPRESENTED
BY ITS AUTHORIZED SIGNATORY SRI PRASHANT KUMAR PANDEY, AGED
AROUND 34 YEARS, SON OF ARUN KUMAR PANDEY RESIDENT OF
VILLAGE BANGARUA, P.O. PRATAPPUR, BAGARUA, DEORIA, UTTAR
PRADESH, 274703
VERSUS
THE STATE OF ASSAM AND 2 ORS
REPRESENTED BY THE COMMISSIONER AND SECRETARY, FINANCE
DEPARTMENT, ASSAM, GUWAHATI
2:THE PRINCIPAL COMMISSIONER OF STATE TAX
ASSAM
GUWAHATI
3:THE ASSISTANT COMMISSIONER OF STATE TAX
GUWAHATI- A-1
GUWAHATI-A
KAR BHAVAN
GUWAHATI
ASSA
Linked Case : WP(C)/4619/2024
THE ASSAM GRAMIN VIKASH BANK
A REGIONAL RURAL BANK FIRM HAVING ITS WITH PAN- AAAAA7147H
GSTIN- 18AAAAA7147H2ZS
HAVING ITS HEAD OFFICE AT 2ND FLOOR
SHANTI COMPLEX
Page No.# 2/28
G.S.ROAD
BHANGAGARH
KAMRUP METROPOLITAN
ASSAM
781005 (CURRENT ADDRESS- ADAMS PLAZA
1ST AND 2ND FLOORS
SRIMANTA SHANKARDEV PATH
CHRISTIAN BASTI
GUWAHATI- 781008) AND BRANCHES AT DIFFERENT PLACES IN THE STATE
OF ASSAM
VERSUS
THE STATE OF ASSAM AND 2 ORS
REPRESENTED BY THE COMMISSIONER AND SECRETARY
FINANCE DEPARTMENT
ASSAM
GUWAHATI
2:THE PRINCIPAL COMMISSIONER OF STATE TAX
ASSAM
GUWAHATI
3:THE ASSISTANT COMMISSIONER OF STATE TAX
GUWAHATI- D-8
GUWAHATI-D
KAR BHAVAN
GUWAHATI
ASSAM
Linked Case : WP(C)/3933/2024
CONSTRUCTION CATALYSERS PRIVATE LIMITED
HAVING ITS REGISTERED OFFICE AT VEDH
484/37
MITRAMANDAL COLONY
PARVATI
PUNE
MAHARASHTRA INDIA- 411009 REPRESENTED BY ITS AUTHORIZED
SIGNATORY SRI PRASHANT KUMAR PANDEY
AGED AROUND 34 YEARS
SON OF ARUN KUMAR PANDEY RESIDENT OF VILLAGE BANGARUA
P.O. PRATAPPUR
BAGARUA
DEORIA
UTTAR PRADESH
274703
Page No.# 3/28
VERSUS
THE STATE OF ASSAM AND 2 ORS
REPRESENTED BY THE COMMISSIONER AND SECRETARY
FINANCE DEPARTMENT
ASSAM
GUWAHATI
2:THE PRINCIPAL COMMISSIONER OF STATE TAX
ASSAM
GUWAHATI
3:THE ASSISTANT COMMISSIONER OF STATE TAX
GUWAHATI- A-1
GUWAHATI-A
KAR BHAVAN
GUWAHATI
ASSAM
Linked Case : WP(C)/4379/2024
M/S NITAI KANGSA BANIK AND ANR
A PROPRIETORSHIP FIRM HAVING ITS OFFICE AT SONAI ROAD
NEAR HOLY CROSS SCHOOL
SILCHAR
ASSAM- 788006
REPRESENTED BY ITS PROPRIETOR SRI NITAI KANGSA BANIK.
2: NITAI KANGSA BANIK
SON OF SRI SUBAL KANGSA BANIK
AGED ABOUT 53 YEARS
RESIDENT OF RAMCHARAN ROAD
KANAKPUR MAIN ROAD
SILCHAR
DISTRICT- CACHAR- 788006.
VERSUS
THE UNION OF INDIA AND 3 ORS.
MINISTRY OF FINANCE
REPRESENTED BY THE SECRETARY TO THE MINISTRY OF FINANCE
GOVERNMENT OF INDIA
NEW DELHI.
2:CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS
1ST FLOOR
Page No.# 4/28
TOWER
NBCC PLAZA
SECTOR- 5
PUSHP VIHAR
NEW DELHI- 110017.
3:THE PRINCIPAL COMMISSIONER
STATE GST
KAR BHAWAN
DISPUR
GUWAHATI
ASSAM
4:THE ASSISTANT COMMISSIONER
OF STATE TAX
SILCHAR-4
SILCHAR
ASSAM
Linked Case : WP(C)/4618/2024
THE ASSAM GRAMIN VIKASH BANK (FORMERLY KNOWN AS LANGPI
DEHANGI RURAL BANK)
A REGIONAL RURAL BANK FIRM HAVING ITS WITH PAN- AABCL0289J
GSTIN- 18AABCL0289J1ZB
HAVING ITS HEAD OFFICE AT 1ST FLOOR
DWCCM SOCIETY BUILDING
G.S.ROAD
DIPHU MAIN
DIPHU
NAGAON
ASSAM
782460 (CURRENT ADDRESS- THE ASSAM GRAMIN VIKASH BANK
ADAMS PLAZA
SRIMANTA SHANKARDEV PATH
CHRISTIAN BASTI
GUWAHATI- 781005) AND BRANCHES AT DIFFERENT PLACES IN THE STATE
OF ASSAM
VERSUS
THE STATE OF ASSAM AND 2 ORS
REPRESENTED BY THE COMMISSIONER AND SECRETARY
FINANCE DEPARTMENT
ASSAM
GUWAHATI
Page No.# 5/28
2:THE PRINCIPAL COMMISSIONER OF STATE TAX
ASSAM
GUWAHATI
3:THE ASSISTANT COMMISSIONER OF STATE TAX
DIPHU-1
DIPHU
NAGAON ZONE
ASSAM
Linked Case : WP(C)/3910/2024
AURORA FINE ARTS
A PARTNERSHIP FIRM HAVING ITS GSTIN- 18AAJFA5773B1ZI
HAVING ITS OFFICE AND WORKS SHOP SITUATED AT 38 INDUSTRIAL
ESTATE
BAMUNIMAIDAN
M G ROAD
GUWAHATI
KAMRUP METROPOLITAN
ASSAM
781021 REPRESENTED BY ONE OF ITS PARTNERS SRI MUNIN MISRA
AGED ABOUT 63 YEARS
SON OF LATE JAGANATH MISRA
RESIDENT OF HOUSE NO.4
BAIKUNTHPUR
GEETANAGAR
GUWAHATI 781021
KAMRUP (METRO) ASSAM
VERSUS
THE STATE OF ASSAM AND 2 ORS
REPRESENTED BY THE COMMISSIONER AND SECRETARY
FINANCE DEPARTMENT
ASSAM
GUWAHATI
2:THE PRINCIPAL COMMISSIONER OF STATE TAX
ASSAM GUWAHATI
3:THE ASSISTANT COMMISSIONER OF STATE TAX
GUWAHATI- A 10
GUWAHATI-A
KAR BHAVAN
GUWAHATI
ASSAM
Page No.# 6/28
Advocate for the Petitioners : Ms. Nitu Hawelia, Advocate
Ms. M. L. Gope, Advocate
Mr. A. Goyal, Advocate
Advocate for the Respondents : Mr. B. Gogoi, Stnading Counsel
Finance and Taxation
Dr. B. N. Gogoi, Advocate
Ms. K. Phukan, Advocate
BEFORE
HONOURABLE MR. JUSTICE DEVASHIS BARUAH
Date of Hearing : 26.09.2024
Date of Judgment : 26.09.2024
JUDGMENT AND ORDER (ORAL)
Heard Ms. Nitu Hawelia, the learned counsel appearing on behalf of
the petitioners in WP(C) No.4379/2024 as well as Mr. A. Goyal, the learned
counsel appearing on behalf of the petitioners in WP(C) No.3912/2024;
WP(C) No.3910/2024; WP(C) No.3933/2024; WP(C) No.4618/2024 and
WP(C) No.4619/2024. I have also heard Mr. B. Gogoi, the learned
Standing Counsel of the Finance and Taxation Department of the
Government of Assam.
2. Before dealing with the issue involved, this Court finds it relevant to
briefly note the facts involved in the instant batch of writ petitions which
are taken up for adjudication.
PROPOSITION OF FACTS AS PER PLEADINGS AND INSTRUCTIONS
WP(C) No.3912/2024
3. In this case, the petitioner was issued a Summary of the show cause
in GST DRC-01 along with an attachment of the determination of tax on
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28.09.2023 for the tax period 2017-18. The petitioner submitted a reply
on 31.10.2023 stating inter-alia that the DGGI (CGST) had initiated
proceedings of enquiry in 2020 in respect to the determination of tax
regarding output liability and eligible ITC for the period covered under
DRC-01. It was further mentioned that in terms with Section 6 (2) (b) of
the Central Goods and Services Tax Act, 2017 (for short, ‘the Central Act’)
parallel proceedings on the same subject matter cannot run, and as such,
requested to drop the proceedings. In the said reply, the petitioner also
filled in the Column “Option for personal hearing” as “Yes”. Subsequent
thereto, on 30.12.2023, an order was passed and the Summary of the
Order in GST DRC-07 was forwarded to the petitioner along with an
attachment wherein details were provided. It is seen that both in the
Summary of the Order dated 30.12.2023 in GST DRC-07 as well as in the
attachment, thereto, the reason assigned was mentioned that the reply
was not satisfactory. It is worth noting herein that both the attachments,
i.e. the attachments to the GST DRC-01 as well as the attachment to the
GST DRC-07 were not authenticated by any signature of the Proper
Officer.
WP(C) No.3910/2024
4. In this writ petition, the petitioner was issued a Summary of Show
Cause dated 28.09.2023 in GST DRC-01 for the tax period from July 2017-
March 2018. Along with the said Summary of Show Cause there was an
attachment as regards the determination of tax. It is the case of the
petitioner that as there was no Show Cause Notice attached to the
Summary of the Show Cause Notice dated 28.09.2023 in the portal, the
petitioner did not submit any reply. Subsequent thereto, an order was
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passed on 25.12.2023 in GST DRC-07. The manner in which the tax was
determined was mentioned in the attachment. The reason assigned is that
the assessee failed to attend the personal hearing. It is relevant to
mention that the attachment to both the Summary of the Show Cause
Notice as well as the Summary of the Order uploaded in GST DRC-01 and
GST DRC-07 were not authenticated by any signature of the Proper
Officer.
WP(C) No.4618/2024
5. In this case, the petitioner herein was issued a Summary of the
Show Cause Notice dated 29.09.2023 in the GST DRC-01. In the said
Summary of the Show Cause Notice, it was mentioned that the Show
Cause Notice was attached. Along with the said Summary of the Show
Cause Notice, there was an attachment to the determination of tax dated
29.09.2023. The petitioner did not reply to the Show Cause Notice in view
of the fact that there was no Show Cause Notice attached to the Summary
of the Show Cause Notice. Pursuant thereto, a Summary of the Order
dated 31.12.2023 was issued in GST GST DRC-07. To the said Summary of
the Order uploaded in GST DRC-07, there was an attachment stating the
manner in which the determination was made. The reason assigned for
passing of the said order was that the taxpayer had not replied or
contested the notice, and as such, had been agreed with the terms of the
notice. It is relevant to mention that the attachments to both the GST
DRC-01 as well as the GST DRC-07 did not contain any signature of the
Proper Officer.
WP(C) No.4619/2024
6. In the this case, the petitioner herein was issued a Summary of the
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Show Cause Notice dated 28.09.2023 in the GST DRC-01. In the said
Summary of the Show Cause Notice, it was mentioned that the Show
Cause Notice was attached. Along with the said Summary of the Show
Cause Notice, there was an attachment to the determination of tax dated
28.09.2023. The petitioner did not reply to the Show Cause Notice in view
of the fact that there was no Show Cause Notice attached to the Summary
of the Show Cause Notice. Pursuant thereto, a Summary of the Order
dated 28.12.2023 was issued in GST DRC-07. To the said Summary of the
Order uploaded in GST DRC-07, there was an attachment stating the
manner in which the determination was made. The reason assigned for
passing of the said order was that the taxpayer had not replied or
contested the notice, and as such, had been agreed with the terms of the
notice. It is relevant to mention that the attachments to both the GST
DRC-01 as well as the GST DRC-07 did not contain any signature of the
Proper Officer.
WP(C) No.3933/2024
7. In this case, the petitioner was issued a Summary of the Show Cause
in GST DRC-01 along with an attachment of the determination of tax on
27.09.2023 for the tax period 2017-18. The petitioner submitted a reply
on 31.10.2023 stating inter-alia that the DGGI (CGST) had initiated
proceedings of enquiry in 2020 in respect to the determination of tax
regarding output liability and eligible ITC for the period covered under GST
DRC-01. It was further mentioned that in terms with Section 6 (2) (b) of
the Central Act parallel proceedings on the same subject matter cannot
run, and as such, requested to drop the proceedings. In the said reply, the
petitioner also filled in the Column “Option for personal hearing” as “Yes”.
Page No.# 10/28
Subsequent thereto, on 31.12.2023, an order was passed and the
Summary of the Order in GST DRC-07 was forwarded to the petitioner
along with an attachment wherein details were provided. It is seen that
both in the Summary of the Order dated 31.12.2023 in GST DRC-07 as
well as in the attachment, thereto the reason assigned was mentioned
that the reply was not satisfactory. It is worth noting herein that both the
attachments, i.e. the attachments to the GST DRC-01 as well as the
attachment to the GST DRC-07 were not authenticated by any signature of
the Proper Officer.
WP(C) No.4379/2024
8. In the instant case, the petitioners were issued a Summary of the
Show Cause dated 29.09.2023. It was mentioned in the said GST DRC-01
that the Show Cause Notice was attached. However, it is the case of the
petitioners that there was no show cause notice, and as such, the
petitioners did not submit any reply. However, subsequently, on
27.12.2023, a Summary of the Order in GST DRC-07 was issued. The
computation on the basis of which the GST DRC-07 was issued was
attached to the GST DRC-07. The reason for passing the said order was
that as no payment had been made within 30 days of the issuance of
notice, and as such, on the basis of the documents available with the
Department and the information furnished by the petitioners.
9. It is relevant to take note of that this Court had issued notice
pursuant to the filing of the writ petitions and enquired with the learned
counsel appearing on behalf of the respondent authorities as to whether
there were Show Cause Notices issued apart from the Summary of the
Show Cause Notice in GST DRC-01, and further, as to whether there were
Page No.# 11/28
Show Cause Notices attached as mentioned in the Summary of the Show
Cause Notice in GST DRC-01. In reply to the above queries so made by
this Court, affidavits have been filed as well as instructions placed that the
Proper Officer had only issued the Summary of the Show Cause Notice in
GST DRC-01 along with the determination of tax. There were no separate
Show Cause Notices issued though reflected in Summary of the Show
Cause Notices in GST DRC-01. During the course of the hearing, Mr. B.
Gogoi, the learned Standing Counsel for the Finance and Taxation
Department had placed an instruction issued by the Joint Commissioner of
Taxes, Assam wherein it has been mentioned that the attachments to the
GST DRC-01 is the Show Cause Notices and in the said attachments, the
case of under declared tax amount were given along with reasons thereof
in order to give the petitioners an opportunity to clarify his or their case of
under declared tax etc. The said instruction is kept on record and marked
with the letter “X”.
10. In the background of the above pleadings and instructions placed,
this Court would like to take note of the contentions made by the learned
counsels appearing on behalf of the parties.
CONTENTIONS OF THE PARTIES
11. Mr. A. Goyal, the learning counsel appearing on behalf of the
petitioners submitted the following:-
(A) It is the requirement in terms of Rule 142 of the Central Goods
and Services Tax Rules, 2017 (for short, ‘the Rules of 2017’) that the
notice under Section 73 has to be issued and a summary thereof is
to be additionally issued electronically in Form GST DRC-01. The
Page No.# 12/28learned counsel for the petitioners submitted that under no
circumstances the attachment to the GST DRC-01 can be said to be
a Show Cause Notice in as much as in the said attachment, there is
no mention that the petitioner is required to show cause.
Additionally, he submitted that the said attachment to the DRC-01
does not contain the signature of the Proper Officer and it is the
mandate of Rule 26 of the Rules of 2017 that the Show Cause
Notice had to be authenticated with digital signature or through E-
signature as specified under the provisions of the Information
Technology Act, 2000 or verified by any other mode of signature or
verification as notified by the Board in that behalf. In that regard,
the learned counsel for the petitioner submitted that the learned
Division Bench of the Telangana High Court in the case of M/s Silver
Oak Villas LLP vs. the Assistant Commissioner ST {WP(C)
No.6671/2024} vide its judgment and order dated 14.03.2024 had
dealt with Rule 26 of the Rules of 2017 and categorically opined that
since the impugned order therein was an unsigned document, it lost
its efficacy in the light of Rule 26 (3) of the Rules of 2017 as well as
the Telangana Goods and Services Tax Act, 2017 and the Rules
framed therein under. It was also observed therein that the Show
Cause Notice as also the impugned order would not be sustainable
and deserved to be set aside and quashed. The learned counsel
further submitted that in the case of A.V. Bhanoji Row vs. Assistant
Commissioner (ST) & Others, reported in (2024) 123 GSTR 432, the
learned Division Bench of the Andhra Pradesh High Court had
observed that as there was no signature of the Proper Officer, the
Page No.# 13/28
same was treated to be void and inoperative.
(B) The learned counsel further submitted that in the case of Nkas
Services Private Limited vs. State of Jharkhand & Others , reported in
(2022) 99 GSTR 145, the learned Division Bench of the Jharkhand
High Court had dealt with the question as regards issuance of a
Summary of Show Cause Notice in GST Form DRC-01 and held that
the Summary of the Show Cause Notice as issued in Form GST DRC-
01 cannot be a substitute to the requirement of a proper Show
Cause Notice. The learned counsel had also referred to another
judgment of the Karnataka High Court in the case of LC Infra
Projects Pvt. Limited vs. Union of India and Others , reported in
(2020) 73 GSTR 248.
12. Ms. Nitu Hawelia, the learned counsel while supporting the
submissions of Mr. A. Goyal, the learned counsel additionally submitted
that in terms of Section 75 (4) of the Central Act as well as also the Assam
Goods and Services Tax Act 2017 (herein after referred to as ‘the State
Act’), there is a requirement of giving an opportunity of hearing when a
request is received in writing from the person chargeable with tax or
penalty or where any adverse decision is contemplated against such
person. The learned counsel submitted the materials on records which
were placed by Mr. A. Goyal, the learned counsel, would show that in
WP(C) No.3912/2024 and WP(C) No.3933/2024, the petitioners therein
had submitted their reply and in the said reply the petitioners had sought
for an opportunity of hearing as would be apparent from a perusal of the
reply enclosed to the writ petitions. The learned counsel submitted that
even in a case where an adverse decision is contemplated to be passed,
Page No.# 14/28
there is a requirement for providing an opportunity of hearing irrespective
of whether the petitioners seek such an opportunity. The learned counsel
referring to the Summary of the Show Cause Notice issued in GST DRC-01
submitted that there is no mention whatsoever about the date of hearing
and the Column had been left blank. She submitted that use of the word
‘or’ in Section 75(4) of the Central Act as well as State Act in between the
words ‘when a request is received in writing from the person chargeable
with tax or penalty’ and ‘where any adverse decision is contemplated
against such person’ clearly shows the legislative intent to the effect that
irrespective of a request made or not but when an adverse decision is
contemplated an opportunity for hearing is mandated. The learned
counsel for the petitioners had referred to the judgment of the learned
Division Bench of the Chhattisgarh High Court in the case of Mahindra &
Mahindra Limited vs. Union of India and Others , (WA No.172/2024)
delivered on 10.04.2024 wherein the learned Division Bench dealt with the
scope and ambit of Section 75 (4) of the Central Act and observed that
when the statute contains a mandate of hearing which is a synonym to
natural justice, it cannot be given a go by or can be made porous. The
learned counsel for the petitioners therefore submitted that in the instant
cases as the impugned orders have been passed without giving a proper
opportunity of hearing as mandated under Section 75 (4) of both the
Central Act as well as the State Act, the impugned orders are liable to be
interfered with.
13. Per contra, Mr. B. Gogoi, the learned standing counsel appearing on
behalf of the Finance and Taxation Department of the Government of
Assam submitted that the respondent authorities have issued the
Page No.# 15/28
Summary of the Show Cause Notice in Form DRC-01 which was
accompanied by the determination of tax which as per the respondents
would have provided all the details so that the petitioners could have
submitted the reply. The learned counsel, however, fairly submitted that
there is no separate Show Cause Notice apart from the determination of
tax enclosed to the Summary of the Show Cause Notice. On the question
of lack of signatures in the attachments to the GST DRC-01 as well as the
GST DRC-07, the learned counsel fairly submitted that the materials on
record do not show that there is/are any signature(s) in the attachment to
the Summary to the Show Cause Notice as well as Summary to the Order
issued in Forms GST DRC-01 and GST DRC-07 respectively. He however
submitted that in the attachments it is mentioned as ‘Sd- Proper Officer’.
The learned counsel further submitted that when the Summary of the
Show Cause Notice as well as the Summary of the Order are uploaded in
GST DRC-01 and GST DRC-07, the same are duly authenticated in the
portal with digital signatures and without such authentication, the portal
cannot be operated.
ANALYSIS AND DETERMINATION
14. I have heard the learned counsels for the petitioners as well as the
respondents. From the materials on record as well as the submissions so
made by the learned counsels for the petitioners it appears that the
petitioners have approached this Court in the present batch of writ
petitions alleging infraction to the various provisions of the Central Act, the
State Act as well as the Rules framed thereunder. It is also the case of the
petitioners that the principles of natural justice have been violated as is
not only a statutory mandate but also violative of Article 21 of the
Page No.# 16/28
Constitution. On the basis of the submissions, the analysis and
determination is required to be made broadly on the following headings:-
(i) Whether Show Cause Notices were issued prior to passing the
Impugned Order under Section 73 (9) of the State Act?
(ii) Whether the determination of tax as well as the Order attached
to the Summary of the Show Cause Notice in GST DCR-01 and
Summary of the Order in GST DCR-07 can be said to be the Show
Cause Notice and Order respectively?
(iii) Whether the impugned orders under Section 73 (9) of the State
Act is in conformity with Section 75(4) of the State Act and is in
consonance with the principles of natural justice?
(i) Whether Show Cause Notices were issued prior to passing the Impugned
Order under Section 73 (9) of the State Act.
15. From the perusal of the records, it would show that in the Summary
of the Show Cause Notices issued in GST DRC-01 to the petitioners in the
batch of writ petitions, there is a mention therein that there is a Show
Cause Notice attached. It is the case of the respondents that the said
attachment wherein determination of tax is mentioned is the Show Cause
Notice. The question therefore arises as to whether the said attachment
can be said to be a Show Cause Notice as per the mandate of both the
Central Act as well as the State Act and the Rules made therein under. It
would be apposite to take note of that in all these cases, the Summary of
the Show Cause Notices have been issued in terms with Section 73.
16. At this stage, this Court would briefly take note of Section 73. A
perusal of Section 73 would show that the said provision is set into motion
Page No.# 17/28
when it appears to the Proper Officer that:-
(a) Any tax has not been paid; or
(b) Any tax short paid; or
(c) Any tax erroneously refunded; or
(d) Where input tax credit had been wrongly availed or utilized.
for any reason other than the reason of fraud or any willful misstatement
or suppression of facts to evade tax.
Taking into account that it is only in the circumstances referred to
above, the Proper Officer is required to issue a Show Cause Notice,
therefore, the Show Cause Notice is required to specifically mention the
reason(s) and the circumstances why the provision of Section 73 had been
set into motion. The person against whom the said Show Cause Notice is
issued would only have an adequate opportunity to submit a
representation justifying that the prerequisites for issuance of Show Cause
Notice is not there if and only if the reason(s) for issuance of the Show
Cause is specifically mentioned in the Show Cause Notice.
Section 73 further stipulates that upon consideration of the
representations, if any, the Proper Officer shall pass the order under
Section 73 (9) determining the amount of tax, interest and penalty.
It is also apposite to mention that Section 73 (2) and Section 73 (10)
are interconnected in as much as Section 73 (10) stipulates that within
three years from the due date for furnishing the annual return for the
financial year, the order under Section 73 (9) can be passed. In terms with
Section 73 (2), the Show Cause Notice is to be issued within three months
Page No.# 18/28
prior to the time limit prescribed in Section 73 (10).
In addition to the above, it would also show from conjoint reading of
Sub-section (1) (2) (3) and (4) of Section 73 that the legislature had
categorically distinguished the Show Cause Notice from the Statement
which is required to be issued by the Proper Officer or in other words,
irrespective of Statement to be issued in terms with Sub-section (3) of
Section 73, there is a requirement of issuance of a Show Cause Notice by
the Proper Officer.
17. At this stage, it is also pertinent to mention that in Section 73, there
is no mention of issuance of a Summary of Show Cause Notice. The
requirement of issuance of a Summary of the Show Cause Notice is seen
in Rule 142 of the Rules of 2017. Rule 142 (1) (a) and (b) is relevant for
which the same is quoted herein below:-
“142. Notice and order for demand of amounts payable under the Act .-(1) The
proper officer shall serve, along with the
(a) notice issued under section 52 or section 73 or section 74 or section 76 or
section 122 or section 123 or section 124 or section 125 or section 127 or
section 129 or section 130, a summary thereof electronically in FORM GST DRC-
01,
(b) statement under sub-section (3) of section 73 or sub-section (3) of section
74, a summary thereof electronically in FORM GST DRC-02, specifying therein
the details of the amount payable.”
From a perusal of the above quoted Rule, it would show that in
addition to the Show Cause Notice to be issued under Section 73 (1) and
the Statement of determination of tax under Section 73 (3), there is an
additional requirement of issuance of a Summary of the Show Cause
Page No.# 19/28
Notice in GST DRC-01 and the Summary of the Statement in GST DRC-02.
The natural corollary from the above analysis is that the issuance of the
Show Cause Notice and the Statement of determination of tax by the
Proper Officer are mandatory requirement in addition to the Summary of
Show Cause Notice in GST DRC-01 and Summary of the Statement in GST
DRC-02.
18. The judgment of the learned Division Bench of the Jharkhand High
Court in the case of Nkas Services Private Limited (supra) had also dealt
with a similar issue and categorically held that a Summary of a Show
Cause Notice issued under GST DRC-01 cannot substitute the requirement
of a proper Show Cause Notice. Similarly, in the case of LC Infra Projects
Pvt. Limited (supra), the learned Single Judge of the Karnataka High Court
had also observed that the issuance of a Show Cause Notice is sine qua
non to proceed with the recovery of interest payable thereon under
Section 50 of the Act and penalty leviable under the provisions of the Act
or the Rules.
19. From the above analysis, this Court is of the view that the Summary
of the Show Cause Notice along with the attachment containing the
determination of tax cannot be said to be a valid initiation of proceedings
under Section 73 without issuance of a proper Show Cause Notice. The
Summary of the Show Cause Notice is in addition to the issuance of a
proper Show Cause Notice. Under such circumstances, this Court is of the
unhesitant opinion that the impugned orders challenged in the instant
batch of writ petitions are contrary to the provisions of Section 73 as well
as Rule 142 (1) (a) of the Rules as the said impugned Orders were passed
with issuance of a proper Show Cause Notice.
Page No.# 20/28
(ii) Whether the determination of tax as well as the order attached to the
Summary to the Show Cause Notice in GST DRC-01 and the Summary of the
Order in GST DRC-07 can be said to be the Show Case Notice and Order
respectively.
20. While deciding supra, this Court duly dealt with what would
constitute a Show Cause Notice, the Statement as per Section 73 (3) as
well as the Summary to the Show Cause Notice in GST DRC-01 and
Summary of the Statement in GST DRC-02. This Court had also opined
above that the statement to be provided by the Proper Officer in terms
with Section 73 (3) cannot be said to be a Show Cause Notice which is
required to be issued in terms with Section 73 (1). Therefore, the
submission of the respondents that the statement attached to the
Summary of the Show Cause Notice is the Show Cause Notice is
completely misconceived and contrary to Section 73 (1) and 73 (3). Be
that as it may, a very pertinent contention had been made by the learned
counsel appearing on behalf of the petitioners to the effect that the
attachments to both the Summary of the Show Cause Notice and
Summary of the Order have no value as the same contains no
authentication of the Proper Officer. In that regard, the learned counsels
referred to Rule 26 (3) of the Rules and the judgment in the cases of M/s
Silver Oak Villas LLP (supra) and A.V. Bhanoji Row (supra).
21. Rule 26 (3) of the Rules of 2017 categorically stipulates as to how
notices, certificates and orders are to be authenticated. The said Sub-Rule
is reproduced herein under:-
“26.(3) All notices, certificates and orders under the provisions of this
Chapter shall be issued electronically by the proper officer or any other officer
Page No.# 21/28authorised to issue such notices or certificates or orders, through digital
signature certificate [or through E-signature as specified under the provisions of
the Information Technology Act, 2000 (21 of 2000) or verified by any other
mode of signature or verification as notified by the Board in this behalf.]”
A perusal of the above quoted Sub-Rule would show that notices,
certificates and orders under the provisions of Chapter III shall be issued
electronically by the Proper Officer or any other officer authorized to issue
such notices or certificates or orders through digital signature certificate or
through e-signature as specified under the provisions of the Information
Technology Act, 2000 or verified by any other mode of signature or
verification as notified by the Board in that behalf. It is relevant to take
note of that Chapter III of the Rules of 2017 pertains to Registration
whereas in respect to Demand and Recovery, it is Chapter XVIII.
22. Now therefore a question arises as to whether Rule 26 (3) can be
applicable to Chapter-XVIII when the said Sub-Rule on refers to Chapter-
III. In the case of M/s Silver Oak Villas LLP (supra), the learned Division
Bench of the Telangana High Court had applied Rule 26 (3) of the Rules of
2017 even to Chapter-XVIII of the Rules of 2017. In the case of A.V.
Bhanoji Row (supra), the learned Division Bench of the Andhra Pradesh
High Court held that the signatures cannot be dispensed with and Sections
160 and 169 cannot save an order, notice, communication which did not
contain a signature. In another judgment of the learned Division Bench of
Delhi High Court in the case of Railsyls Engineers Private Limited vs.
Additional Commissioner of Central goods and Services Tax (Appeals-11)
and Anr., reported in (2023) 112 GSTR 143, the Delhi High Court held that
there was a requirement of at least putting the digital signatures on the
Page No.# 22/28
Show Cause Notice and Order in Original.
23. A perusal of the provisions of Section 73 would show that the Show
Cause Notice is required to be issued by the Proper Officer, the Statement
under Section 73 (3) is to be issued by the Proper Officer as well as the
Order under Section 73 (9) is required to be passed by the Proper Officer.
Section 2 (91) of the Act defines who is the Proper Officer meaning
thereby either the Commissioner or the Officer who had been specifically
entrusted by the Commissioner. As it is the statutory mandate that it is
only the Proper Officer who has the authority to issue Show Cause Notice
and the Statement and pass the order, the authentication in the Show
Cause Notice, Statement as well as the Order by the Proper Officer is a
must and failure to do so, makes the Show Cause Notice, Statement and
Order ineffective and redundant.
24. It is also important to note that the Act only stipulates that notice
would be issued and order would be passed by the Proper Officer. The
manner in which the Proper Officer would authenticate the notice(s) or
the order(s) in so far as other Chapters of the Rules of 2017 is silent
except Chapter-III. Taking into account the utmost necessity of the
authentication by the Proper Officer, this Court is of the opinion unless
appropriate insertion are made in the Rules or notification are issued as
per the directions of the Board to fill the void in the Rules of 2017, the
authentication in the manner stipulated in Rule 26 (3) of the Rules of 2017
has to be applied as and when the Proper Officer is required to issue
notice or Statement and pass Order in terms with the Act.
Page No.# 23/28
(iii) Whether the impugned orders under Section 73 (9) of the State Act is in
conformity with Section 75 (4) of the State Act and is in consonance with
the principles of natural justice.
25. This Court has duly perused the Summary of the Show Cause
Notices wherein the petitioners were only asked to file their reply on a
date specified. There was no mention as to the date of hearing and the
Column was kept blank. In two writ petitions, i.e. WP(C) No.3912/2024
and WP(C) No.3933/2024, the petitioners had sought for an opportunity of
hearing which was however not given. In this regard, if this Court takes
note of Section 75 (4) of both the Central Act as well as State Act, it
would be seen that it is the mandate of the said provision that an
opportunity of hearing should be granted when a request is received in
writing from the person chargeable with tax or penalty or when any
adverse decision is contemplated against such person. The mandate of
Section 75 (4) of both the Central and State Act are safeguards provided
to the assessees so that they can have a say in the hearing process.
26. It is also seen that in the reply to be submitted in Form GST DRC-
06, there is an option given for personal hearing at Sl. No.7. As stated
above, the petitioners in WP(C) No.3912/2024 and WP(C) No.3933/2024
have specifically filled up the Column as “Yes” wherein the option for
personal hearing was mentioned. Inspite of that, there was no opportunity
of hearing afforded to those petitioners.
27. The learned Division Bench of the Chhattisgarh High Court in the
case of Mahindra & Mahindra Limited (supra) had categorically observed
that when the statute contains a mandate of hearing, the same has to be
Page No.# 24/28
granted, else it would render the provision porous.
28. This Court is of the opinion that when the statute is clear to provide
an opportunity of hearing, there is a requirement of providing such
opportunity. In fact a perusal of the Form GST DRC-01 enclosed to the
writ petitions shows details have been given as regards the date by which
the reply has to be submitted; date of personal hearing; time of personal
hearing and venue of personal hearing. It is seen that in the Summary of
the Show Cause Notice only the date for submission of reply has been
mentioned. In respect to other details as stated above have been
mentioned to as ‘NA’. It may be that the Proper Officer assumed that
based on the reply he/she may proceed with the adjudication depending
as to whether the person to whom the notice is issued had opted for
personal hearing or not. But in a case where no reply is filed, a question
arises whether the Proper Officer can pass an adverse order without
providing an opportunity for hearing. The answer has to be in the negative
else it would render the second part of Section 75 (4) redundant.
CONCLUSION
29. On the basis of the above analysis and determination, this Court
disposes of the instant batch of writ petitions with the following
observations and directions:-
(A) The Summary of the Show Cause Notice in GST DRC-01 is not a
substitute to the Show Cause Notice to be issued in terms with
Section 73 (1) of the Central Act as well as the State Act.
Irrespective of issuance of the Summary of the Show Cause Notice,
the Proper Officer has to issue a Show Cause Notice to put the
Page No.# 25/28
provision of Section 73 into motion.
(B) The Show Cause Notice to be issued in terms with Section 73 (1)
of the Central Act or State Act cannot be confused with the
Statement of the determination of tax to be issued in terms with
Section 73 (3) of the Central Act or the State Act. In the instant writ
petitions, the attachment to the Summary of Show Cause Notice in
GST DRC-01 is only the Statement of the determination of tax in
terms with Section 73 (3). The said Statement of determination of
tax cannot substitute the requirement for issuance of the Show
Cause Notice by the Proper Officer in terms with Section 73 (1) of
the Central or the State Act. Under such circumstances, initiation of
the proceedings under Section 73 against the petitioners in the
instant batch of writ petitions without the Show Cause Notice is bad
in law and interfered with.
(C) It is also noticed that the Show Cause Notice and the Statement
in terms with Section 73 (1) and 73 (3) of both the Central Act or
the State Act respectively are required to be issued only by the
Proper Officer as defined in Section 2 (91). Additionally, the order
under Section 73 (9) is also required to be passed by the Proper
officer. The Summary of the Show Cause Notice, the Summary of
the Statement under Section 73 (3) and the Summary of the Order
passed in terms with Section 73 (9) are to be issued in GST DRC-01,
GST DCR-02 and GST DRC-07 respectively. The issuance of the
Summary of the Show Cause Notice, Summary of the Statement and
Summary of the Order do not dispense with the requirement of
issuance of a proper Show Cause Notice and Statement as well as
Page No.# 26/28
passing of the Order as per the mandate of Section 73 by the Proper
Officer. As initiation of a proceedings under Section 73 and passing
of an order under the same provision have consequences. The Show
Cause Notice, Statement as well as the Order are all required to be
authenticated in the manner stipulated in Rule 26 (3) of the Rules of
2017.
(D) The Impugned Orders challenged in the writ petitions are in
violation of Section 75 (4) as no opportunity of hearing was given as
already discussed herein above.
(E) The impugned orders challenged in the instant batch of writ
petitions, the details of which are given in the Appendix attached to
the instant judgment are set aside and quashed.
(F) This Court also cannot be unmindful of the fact that it is on
account of certain technicalities and the manner in which the
impugned orders were passed, this Court interfered with the
impugned orders and hence set aside and quashed the same. It is
also relevant to take note of that the respondent authorities were
under the impression that issuance of attachment of the
determination of tax which was attached to the Summary of the
Show Cause Notice would constitute a valid Show Cause Notice.
Under such circumstances, in the interest of justice, this Court while
setting aside the impugned Orders-in-Original as detailed out in the
Appendix, grants liberty to the respondent authorities to initiate de
novo proceedings under Section 73, if deemed fit for the relevant
financial year in question. This Court further observes and directs
that the period from the date of issuance the Summary of the Show
Page No.# 27/28
Cause Notices upon the petitioners till the date a certified copy of
the instant judgment is served upon the Proper Officer, be excluded
while computing the period prescribed for passing of the order
under Section 73 (10) of the Central Act as well as the State Act as
the case may be.
30. With the above observations and directions, the writ petitions stand
disposed of.
JUDGE
Page No.# 28/28
APPENDIX
1. The impugned Order-in-Original bearing No.ZD1812230625885
dated 30.12.2023 passed by the Assistant Commissioner of State Tax,
Guwahati challenged in WP(C) No.3912/2024 is set aside and
quashed.
2. The impugned Order-in-Original bearing No.ZD1812230420403
dated 25.12.2023 passed by the Assistant Commissioner of State Tax,
Guwahati challenged in WP(C) No.3910/2024 is set aside and
quashed.
3. The impugned Order-in-Original bearing No.ZD181223067126I
dated 25.12.2023 passed by the Assistant Commissioner of State Tax,
Guwahati challenged in WP(C) No.3933/2024 is set aside and
quashed.
4. The impugned Order-in-Original bearing No.ZD181223047773B
dated 27.12.2023 passed by the Assistant Commissioner of State Tax,
Guwahati challenged in WP(C) No.4379/2024 is set aside and
quashed.
5. The impugned Order-in-Original bearing No.ZD1812230657747
dated 31.12.2023 passed by the Assistant Commissioner of State Tax,
Guwahati challenged in WP(C) No.4618/2024 is set aside and
quashed.
6. The impugned Order-in-Original bearing No.ZD181223053533L
dated 28.12.2023 passed by the Assistant Commissioner of State Tax,
Guwahati challenged in WP(C) No.4619/2024 is set aside and
quashed.
Comparing Assistant