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2024 (1) TMI 376 - HC - GSTValidity of Show cause notice (SCN) for GST demand - Transitional credit - Input Tax Credit availed by the petitioner under the Pre-Goods and Services Tax regime and rolled over to the Goods and Services Tax regime - setting aside DRC-07 dated 23.08.2018 issued by respondent No. 4 without passing of adjudication order and in violation of Principle of natural justice - Validity of SCN - it is also alleged that SCN does not fulfill the ingredients of proper show cause notice and is issued in excess of its jurisdiction. Input Tax Credit availed by the petitioner under the Pre-Goods and Services Tax regime and rolled over to the Goods and Services Tax regime - HELD THAT:- The said issue is squarely covered by the decision of this Court rendered in the case of Usha Martin Limited being W.P.(T) No. 3055 of 2022 dated 10.11.2022 [2022 (11) TMI 1266 - JHARKHAND HIGH COURT], wherein this Court held that the repeal of the existing laws upon coming of the G.S.T. law regime did not leave a vacuum as to past transactions which were not closed. The repeal and saving clause (e) under Section 174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted in respect of inchoate rights except rights under transactions which were past and closed. As a matter of fact, section 174 of the JGST Act deals with repeal and saving provision, wherein the JVAT Act, 2005, except in respect of goods included in Entry 54 of the State List of the Seventh Schedule of the Constitution, Jharkhand Entertainment Tax Act, 2012, Jharkhand Advertisement Tax Act, Jharkhand Entry Tax on consumption or use of goods Act, 2011 were repealed - However, section 174(2)(e), saves any investigation, inquiry, verification, assessment, adjudication and any other legal proceedings as if these Acts have not so amended or repealed. Thus, the GST authorities are incorrect in assuming jurisdiction and initiating a proceeding under the provision of the JGST Act alleging therein that the Input Tax Credit so transited from the pre-GST regime is inadmissible under the JVAT regime. Setting aside DRC-07 dated 23.08.2018 issued by respondent No. 4 without passing of adjudication order and in violation of Principle of natural justice - HELD THAT:- The Respondent department without issuing any detailed Show Cause Notice has proceeded with the matter by merely issuing a “Summary of Show Cause Notice” being FORM GST DRC-01 dated 21.07.2018 (Annexure-2). Thus, the very initiation of the adjudication proceeding without issuance of detail Show Cause Notice is void ab initio and any consequential adjudication order passed thereto is non-est in the eyes of law. In the case at hand, FORM GST DRC-01 (Annexure-2) in question has been issued without specifying any date of hearing nor the relevant provisions have been struck down for the reason that the Show Cause Notice has been issued u/s 73 & 74 both. The purpose of Section 73 and 74 of the JGST Act are entirely different from each other and the proceedings under either of the section can be initiated as the foundational facts do suggest. Thus, FORM GST DRC-01 being ‘Summary of Show Cause Notice” does not constitute a proper Show Cause Notice as the mandatory ingredients are absent. Thus, on this score alone, the impugned show-cause notice is fit to be quashed. Validity of SCN - it is also alleged that SCN does not fulfill the ingredients of proper show cause notice and is issued in excess of its jurisdiction - HELD THAT:- In the present case no adjudication order has been passed by Respondent authority and they have straightaway proceeded to issue FORM GST DRC- 07 being ‘summary of order’ in utter disregard to the mandatory provisions of the GST Act and thus the entire proceeding is non-est in the eyes of law - The fact that no adjudication order has been passed in the present matter has duly been accepted by the Respondent authority in their Counter Affidavit at para 15. It is reiterated that no opportunity of hearing at any stage has ever been granted to the Petitioner being utter disregard to the section 75(4) of the JGST Act. Thus, the present case is also hit by violation of Principles of Natural Justice. The impugned show cause notice being reference no. 1519 dated 21.07.2018 (Annexure-2) & the DRC- 07 dated 23.08.2018 (Annexure-3), is hereby quashed and set-aside - Application allowed.
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