TMI Blog2022 (7) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of a proper show-cause notice the petitioners herein have been denied proper opportunity to defend themselves of the charges. The requirement of affording opportunity of hearing as contemplated in Section 75(4) of the JGST Act has also been denied. Section 75(5) provides that in case sufficient show-cause is shown by the person chargeable with tax, the proper officer shall grant time to the said person and adjourn the hearing for reasons to be recorded in writing provided that no such adjournment shall be granted for more than three times to a person during the proceedings. At this stage that the summary of show-cause notice in case of each of the writ petitioners is in the same format and language. It does not indicate any date for filing reply. The language employed also creates a clear impression that the liability towards tax, penalty and interest has been already pre-determined. None of the petitioners got any opportunity to reply to the summary of the show-cause notice either as no date or time was indicated therein. The adjudication order has been passed thereafter confirming this liability towards tax, penalty and interest indicated in the summary of show-cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. ORDER Heard learned counsel for the petitioners Mr. Sumeet Gadodia assisted by Mr. Ranjeet Kushwaha, Mr. Sachin Kumar, learned A.A.G.-II appearing for the State in all these writ petitions and Mr. Ashish Kr. Shekhar learned counsel appearing for the CGST in W.P.(T) Nos. 3153 of 2020, 3154 of 2020 and 3179 of 2020. Since common issues are involved in all these writ petitions, therefore they have been tagged together and are being decided by this common judgment. 2. Writ petitioners have prayed for quashing of the summary of show-cause notice issued in Form GST DRC-01 by the respondent State Tax Officer on the ground that the summary of show-cause notice has pre-judged and pre-decided the entire issue and has in fact fastened the liability towards tax, interest and penalty upon the individual petitioners. The petitioners in their individual writ petitions have also sought for quashing of the adjudication order passed under Section 74(9) of the Jharkhand Goods and Services Tax Act, 2017 (hereinafter referred to as JGST Act for short) on the ground that without granting any opportunity of hearing, tax, interest and penalty has been fastened upon the petitioners in a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings either under Section 73 or 74 of the JGST Act be not initiated. It is the case of the individual petitioners that despite appearance of their representatives before the respondent Deputy Commissioner of State Tax, concerned circles, no documents were examined nor any inquiry was undertaken. None of the petitioners have received any summon whatsoever in terms of Section 70 of the Act for giving evidence. Individual petitioners therefore were under a bonafide belief that the authority was satisfied with the documents and such accounts produced at the time of inspection and no further proceedings would be undertaken. However, to their surprise, a summary of show-cause notice was issued bearing separate reference number of the same date or of different date in case of some of the petitioners. A perusal of this summary of show cause notice issued in Form GST DRC-01 under Rule 142(1) of the JGST Rules would show that the respondent State Tax Officer has, in fact, come to a finding that input tax credit has been wrongly availed or utilized by reason or fraud or any willful misstatement or suppression of fact and therefore individual petitioners are liable for tax, interest unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the premises of the petitioners on the basis of intelligence note such documents should have been given to the petitioners to enable them to properly answer the charges based thereupon. The petitioners have also been denied the principles of natural justice by denying opportunity to crossexamine such witnesses who support the inspection report and the intelligence note. He has also placed reliance on the case of Jharkhand Ispat Pvt. Ltd. Vrs. Union of India Ors. [W.P.(T) No.4241 of 2018] judgment dated 16 th April 2019 in support of the same proposition. Learned counsel for the petitioners submits that in terms of Section 74 Sub-section (2) and Subsection (10), any fresh proceedings shall not be barred by limitation even in some of the present cases where the tax period relates to 2017-18. The cut-off date for initiation of proceeding i.e., 5 years would expire six months prior to the time limit specified in Sub-section 10 for issuance of an order i.e. 31 st December 2023. Learned counsel for the petitioners has also placed Section 75(3) of the Act which provides that if an order is required to be issued in pursuance of the direction of the appellate authority or appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /person in accordance with law. The intelligence note also indicated that the transaction of the petitioners like M/s. Mahaveer Steel Industries, M/s Nisha Enterprises and others appeared to be a case of bill trading/circular trading. Based on such inspection carried out at the business premises of the individual dealers/petitioners upon proper authorization, inspection report was prepared and copy whereof was handed over to the representative of the petitioner firm which was duly received by him. The inspection report made out a prima-facie case of bill trading / circular transaction in case of the individual petitioners who were asked to produce the documents in this regard. It appeared from the documents made available by the petitioners that the transactions were not supported by proper e-way bills. There were apparent discrepancies in the returns filed by the petitioners in Form GSTR- 2A, GSTR-1 and GSTR-3B which showed sham/circular transactions with few dealers. The inward supply and outward supply were shown to have been made with the same dealer/person. Time was granted to the individual petitioners on their request to produce the documents with intimation as to why procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why the proposed tax, penalty and interest be not imposed upon him. The language of the impugned show-cause notice are in the nature of a pre-judged and predetermined liability of tax, penalty and interest. The compilation of the records certified to be true from the original records produced by learned State Counsel in respect of each of the writ petitioners pursuant to the order dated th May 2022 do not disprove the specific lacunae pointed out by the petitioners in initiation and conduct of the proceedings leading up to the adjudication order which has confirmed the tax, penalty and interest indicated in each of the show-cause notice in its totality without any variation. Learned A.A.G.-II however submits that in case the impugned show-cause notice and adjudication order and the demand notices are set aside, the matter may be remanded to the competent State Tax Officer to initiate fresh proceeding for the relevant tax period in accordance with law and take a fresh decision. Learned counsel for the State also agrees to the contentions of the petitioners that any initiation of fresh proceeding upon remand would not be hit by limitation in view of the specific provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Jawan Kastha Bhandar 2017-18 Common (An-2, Pg. 30 to 34) 25.10.2019 (An-3, Pg35) 25.2.2020 (An-4, Pg-36) 25.2.2020 (An-4/1, pg 39) WPT No. 3210/2020 M/s Priti Enterprises 2018-19 28.6.2019 (An-2, Pg. 34 to 38) 25.10.2019 (An-3, Pg39) 25.2.2020 (An-5, Pg-41) 25.2.2020 (An-5/1, pg 44) WPT No. 3211/2020 M/s Priti Enterprises 2017-18 Common (An-2, Pg. 34 to 38) 25.10.2019 (An-3, Pg39) 25.2.2020 (An-5, Pg-41) 25.2.2020 (An-5/1, pg 44) WPT No. 3262/2020 Nisha Enterprises 2017-18 1.7.2019 (An-2, Pg.36) 25.10.2019 (An-3, Pg41) 25.2.2020 (An-5, Pg-44) 25.2.2020 (An-5/1, pg 47) WPT No. 3278/2020 Nisha Enterprises 2018-19 Common (An-2, Pg.36) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual petitioners. Section 74(1) reads as under :- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 and a penalty equivalent to the tax specified in the notice. 12. It provides that if any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, the proper officer shall serve notice on the person chargeable with tax requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of making his objection against the proposed charges indicated in the notice. 25. Expressions like a reasonable opportunity of making objection or a reasonable opportunity of defence have come up for consideration before this Court in the context of several statutes. A Constitution Bench of this Court in Khem Chand v. Union of India, of course in the context of service jurisprudence, reiterated certain principles which are applicable in the present case also. 26. S.R. Das, C.J. speaking for the unanimous Constitution Bench in Khem Chand held that the concept of reasonable opportunity includes various safeguards and one of them, in the words of the learned Chief Justice, is: (AIR p. 307, para 19) (a) An opportunity 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; 27. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the chargesheet, cannot, instead of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat upon perusal of Annexure-2 which is the statutory form GST DRC-01 issued to the petitioner, although it has been mentioned that there is mismatch between GSTR-3B and 2A, but that is not sufficient as the foundational allegation for issuance of notice under Section 74 is totally missing and the notice continues to be vague. 18. Since we are of the considered view that the impugned show-cause 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. 13. In the absence of a proper show-cause notice the petitioners herein have been denied proper opportunity to defend themselves of the charges. The requirement of affording opportunity of hearing as contemplat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mandatory provisions of the GST Act and in violation of the principles of natural justice and, thus, the Adjudication Orders, allegedly dated 13.08.2020, are liable to be quashed and set aside on this ground also. 15. We may usefully point out at this stage that the summary of show-cause notice in case of each of the writ petitioners is in the same format and language. It does not indicate any date for filing reply. The language employed also creates a clear impression that the liability towards tax, penalty and interest has been already pre-determined. None of the petitioners got any opportunity to reply to the summary of the show-cause notice either as no date or time was indicated therein. The adjudication order has been passed thereafter confirming this liability towards tax, penalty and interest indicated in the summary of show-cause notice in case of each of the writ petitioners. The extract of one of the summary of show-cause notice and the adjudication order passed in the case of one of the petitioners M/s. Jai Jawan Kastha Bhandar in relation to the tax period 2018-19 relating to W.P.(T) No.3153 of 2020 is being extracted hereunder which shows that the impugned su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The earliest tax period in case of some of the petitioners like W.P.(T) Nos.3179 of 2020, 3262 of 2020 and 1083 of 2021 relates to 2017-18. Initiation of proceedings would be permissible within a period of 6 months prior to expiry of 5 years from the date of filing of the annual returns i.e. 31st December 2018. 18. As an upshot of the discussions made herein above and for the reasons recorded, the impugned show-cause notice, the adjudication orders and the summary of the order/demand notice in DRC-07 in the case of the individual petitioners cannot be sustained in the eyes of law and on facts. They are accordingly set aside. The respondents State Tax authorities are at liberty to initiate fresh proceedings by issuing a proper show-cause notice in respect of the individual writ petitioners relating to the relevant tax periods and take a decision thereupon in accordance with law. It is abundantly made clear that this Court has not gone into the merits of the case of any of the petitioners herein. The Adjudicating Officer shall be entitled to take a fresh decision without being prejudiced by any observation made hereinabove whatsoever. 19. The writ petitions are allowed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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