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2024 (4) TMI 211 - HC - GST


Issues Involved:
1. Issuance of Show Cause Notice under Section 73(1) of the Jharkhand Goods and Services Tax Act, 2017.
2. Validity of Summary of Show Cause Notice in FORM GST DRC-01.
3. Opportunity of Hearing before fastening liability.
4. Quashing of order/notice dated 14.07.2020.
5. Validity of GST DRC-07 issued on 16.07.2020.
6. Authority of law in issuing Summary Notice and Summary Order.
7. Attachment of Cash Credit and Current Account.
8. Recall of attachment/freezing of bank account.
9. Attachment of Cash Credit Account.

Summary:

1. Issuance of Show Cause Notice under Section 73(1):
The petitioner argued that they were not served with the mandatory Show Cause Notice under Section 73(1) of the Jharkhand Goods and Services Tax Act, 2017, which is a jurisdictional notice. The court found that the proper officer acquires jurisdiction only after serving such a notice, which was not done in this case.

2. Validity of Summary of Show Cause Notice in FORM GST DRC-01:
The petitioner contended that the Summary of Show Cause Notice issued under Rule 142(1) without the mandatory Show Cause Notice under Section 73(1) is void ab initio. The court agreed, noting that the provisions of Sections 73 and 74 are mandatory and were not complied with.

3. Opportunity of Hearing:
The court observed that no opportunity of hearing was extended to the petitioner, which is a settled principle of law for any proceeding with civil and penal consequences. This lack of hearing rendered the proceedings void.

4. Quashing of order/notice dated 14.07.2020:
The court found that the impugned order dated 14.07.2020 was never served upon the petitioner in the prescribed manner and was issued during the Covid-19 period. The order was quashed as it violated principles of natural justice.

5. Validity of GST DRC-07 issued on 16.07.2020:
The court noted that the GST DRC-07 was issued manually, fastening liability under taxes, interest, and penalty without proper jurisdiction. This was deemed void ab initio.

6. Authority of law in issuing Summary Notice and Summary Order:
The court held that the respondents failed to follow the authority of law, as the petitioner was not given any opportunity of defense/rebuttal before the issuance of the Summary Notice and Order.

7. Attachment of Cash Credit and Current Account:
The court found that the attachment of the petitioner's Cash Credit and Current Account was beyond jurisdiction and a misuse of power, as it was done without any order passed by the Commissioner in Form GST DRC-01.

8. Recall of attachment/freezing of bank account:
The court directed the respondents to recall the letter of attachment/freezing of the petitioner's bank account, as the attachment was not in compliance with Section 83 of the Act.

9. Attachment of Cash Credit Account:
The court clarified that the Cash Credit Account is not an asset of the petitioner and cannot be attached. The exercise of power under Section 79 was deemed a misuse of authority.

Conclusion:
The court quashed the impugned order/notice dated 14.07.2020 and the subsequent GST DRC-07 dated 16.07.2020. The attachment/freezing of the petitioner's bank account was also quashed. The matter was remitted back to the Adjudicating Authority to issue a statutory notice and pass a fresh order with respect to interest after verifying records, following due process of law. The writ application was allowed.

 

 

 

 

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