Heard learned counsel for the parties.

2. The instant writ application has been preferred by the petitioner praying therein for quashing the impugned order dated 4.8.2021 (Annexure-3) and the impugned notice of demand issued under Form DRC-07 dated 5.8.2021 (Annexure-4) and also the summary of show cause notice dated 3.11.2020 (Annexure-1) on the ground that the same has been issued without following the due provisions of Jharkhand Goods and Service Tax (hereinafter referred as JGST Act).

3. The facts of the case as enunciated in the instant writ application is that the petitioner is a company engaged in providing service in relation to mining and works contracts holding GSTIN No.20AABCT6759R1ZR. The petitioner receives various goods and services being inputs and/or input service to the outward supplies against valid GST invoices. The petitioner in terms of Section 16 of the CGST Act and JGST Act takes credit of the goods and services tax (GST) paid on the stated inward supplies of goods and services within the period prescribed thereunder, particularly 16(4) of the Act.

During the period 2018-19, it had received goods and services but claimed input tax credit in the subsequent financial year of 2019-20 on or before the prescribed due date under Section 16(4) of the Act. Likewise, the company also encountered transactional events wherein the goods and/or services were supplied in the financial year of 2018-19, but the invoice was raised by the vendor in the following financial year 2019-20, or the invoices were received by the company in a 2018-19, but the goods supplied thereunder were in transit and were eventually received by the company in the subsequent financial year 2019-20. At all times however, the company would only take input tax credit which was deemed eligible under the Act and the rules framed thereunder, and within the time limit prescribed therein. However, owing to the stated events, there was a mismatch of the GST payable on inward supplies as recorded in the Form GSTR 2A for the financial period from 2018-20 with the GSTR 3B returns filed by the company during this period. Resultantly, in 2018-19, the company availed less credit of GST than what was available to it in terms of the GSTR 2A returns. Whereas in 2019-20, owing to the delayed availment of credit on supplies effected in the previous financial year, the company took input tax credit in excess of the GST paid on the inward supplies effected in 2019-20.

During the scrutiny of its returns, the jurisdictional State GST authority, on discovering the mismatch of the Form GSTR 2A and Form GSTR 3B returns for the financial period 2019-20, issued a Summary of Show Cause Notice dated 03.11.2020 to the company alleging that it had taken excess input tax credit during the said period to the alleged extent of Rs. 5,60,47,266.51.

It is specific case of the petitioner that the Summary of the Show Cause Notice was not accompanied by a Show Cause Notice, and no copy of any Show Cause Notice to which the said Summary pertains was or has been received by the Petitioner company to date. The Company replied to the said Summary of Show Cause Notice dated 03.11.2020 by its letter dated 10.03.2021, denying that any excess input tax credit has been availed by it during the said period. The Company accordingly prayed for time to carry out a full reconciliation of the auto-populated Form GSTR 2A and Form GSTR 3B for the said period. The company also explained that though it had received a notice in Form ASMT 10 by electronic mail to its registered mail address under the Act, [email protected], it was not able to respond to such mail earlier owing to its employee tending to such communications having left the company during such time.

Thereafter, following submission of the said reply to the Summary of the Show Cause Notice, the Respondent No. 2 proceeded to pass an Order dated 04.08.2021 (Annexure-3), upholding the allegations and demands raised in the said Summary of the Show Cause Notice.In particular, by the said Impugned Order, the Deputy Commissioner of State Tax, confirmed a GST (tax) demand of Rs. 5,60,47,266.51, with interest thereon, in terms of Sections 73(1), (9) and 50 of the Act. The said impugned order was thereafter followed by a Summary issued to the Petitioner company on 05.08.2021 in Form DRC-07 seeking to recover the stated demand from the petitioner.

4. Mr. Nitin Kumar Pasari assisted by Ms. Sidhi Jalan, learned counsel for the petitioner submits that this is glaring example for not proceeding/concluding the proceeding in accordance with provision of the JGST Act, inasmuch as, no notice under Section 142(1) of the Act has been issued and only a summary of show cause notice dated 03.11.2020(Annexure01) has been issued to the petitioner. He further draws attention of this Court towards Form GST ASMT-10 and submits that there it was categorical mentioned that if no explanation is received by the due date mentioned in the said notice is revenue will proceed in the matter in accordance with law. However,only a summary of show cause notice was issued andno show cause notice was issued in terms of Section 73 (1) of the JGST Act.

He further submits that the petitioner company replied to the said summary of show cause notice by its letter dated 10.3.2021 denying that any excess Input Tax Credit availed and further the company also prayed for time to carry out a full reconciliation of the auto-populated form GSTR 2A and Form GSTR 3B for the said period. However, the respondent no.2 proceeded to pass an order impugned uploading the allegation and demand raised in the said summary of show cause notice. However, admittedly the detail of show cause has not been served to the petitioner.

He further submits that even the petitioner has not been afforded the right of personal hearing which is mandatory under 75 (4) (5) of the Act. Thus, the impugned order is liable to be dismissed on this score alone. He further relied upon the judgment passed in the case of M/s NKAS Service Private Ltd. Vs. State of Jharkhand & others passed in W.P.(T) No.2444 of 2021 in relation to a show cause notice issued under Section 74 of the JGST Act, 2017 and also in the case of same petitioner in W.P.(T) No.2659 of 2021 wherein this Court has categorically held that the impugned notice lack in fulfilling the ingredients of proper show cause notice under Section 73 of the Act. He further referred to the judgment passed in the case of M/s Godavari Commodities Ltd. Vs. The State of Jharkhand &others., passed in W.P.(T) Nos. 3908 of 2020 with 3909 of 2020 wherein this Court has held that personal hearing is mandatory before passing of the final order.

5. Mr. P.A.S.PatiGA-II, learned counsel for the respondents defended the impugned order by relying on the counter affidavit and submits that on the scrutiny of the return furnished by the petitioner under Section 61 of the Act a notice of intimation in the form prescribed under Form ASMT-10 was served upon the petitioner intimating discrepancies in the return vide reference No.3473 dated 27.4.2020 and since the petitioner failed to respond to the aforesaid notice it was presumed that the petitioner has nothing to say in the matter and hence proceeding under Section 73 was initiated against the petitioner which is in accordance with law as contemplated under sub-Section 3 of Section 61 of the Act.

Though he could not defend the fact that proper show cause notice has not been served to the petitioner before issuance of summary of show cause notice in Form DRC-01, however learned counsel tried to justify the action of the respondent by submitting that the proper officer had already intimated the petitioner through the notice in form ASMT-10 and if the petitioner failed to furnish its explanation within stipulated time the proceeding in accordance with law will be initiated. He further submits that though proper show cause notice was not issued to the petitioner, however, from perusal of summary of notice in Form DRC-01 it would transpire that the gist of acquisition has been duly communicated to the petitioner.

For brevity, para-7 and 10 of the counter affidavit is quoted hereinbelow:-

“7. That the Hon’ble Court may appreciate the fact that the provisions of the Goods and Services Tax Act, 2017 were a new statute for both the tax payers as well as the tax Authorities and prior to the view taken by this Hon’ble Court that issuance of the detail Show Cause Notice is a condition precedent for initiation of proceeding under Section 73, it was a general perception that issuance of the Summary of the Show Cause Notice is sufficient for initiation of the proceeding under Section 73 of the Goods and Services Tax Act. 2017.

10. That it is stated and humbly submitted that from perusal of the provisions mentioned hereinabove it is evident that the proceeding initiated in this matter under Section 73 is in accordance with law. Further it is submitted that it is admitted fact that the detail Show Cause Notice has not been served to the Petitioner before issuance of the Summary of the Show Cause Notice in FORM DRC-01. However the Hon’ble Court may appreciate the fact that the proper Officer has already intimated the Petitioner through the Notice in FORM ASMT-10 that if the Petitioner fails to furnish his/her explanation within the time as intimated, the proceeding in accordance with law i.e. under Section 73 will be initiated without any further reference in this regard.”

6. Having heard learned counsel for the parties and after going through the documents available on record and the averments made in the respective affidavits, especially in paragraph 7 & 10 of the counter affidavit quoted hereinabove, it clearly transpires that admittedly; the show cause notice in terms of Rule-142(1) of the JGST Rules has not been served to the petitioner before issuance of summary of notice in Form DRC-01.

It has been further admitted by the respondents that the tax authorities prior to the view taken by this Court with regard to the issue in hand that issuance of detail show cause notice is a condition precedent for initiation of proceeding under Section 73 of the Act; bore a general perception that issuance of summary show cause notice is sufficient for initiation of proceeding under Section 73 of the Act. At this stage it is pertinent to mention here that the law is now well settled by this Court in various judgments that summary of show cause notice cannot substitute or be deemed as proper show cause notice as per section 73 of the Act.

Further, in the case of M/s Godavari Commodities Ltd. Vs. The State of Jharkhand &others., passed in W.P.(T) Nos. 3908 of 2020 with 3909 of 2020 personal hearing has been held to be mandatory, if the petitioner disputes the liability.

For brevity paragraph Nos. 21 of the aforesaid is quoted hereinbelow:-

“21. At this stage, we deem it appropriate to quote the provisions of Section 75(4) and 75(5) of the CGST/JGST Act:-

“75. General provisions relating to determination of tax

(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, 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.”

7. Admittedly in the case at hand neither the proper show cause notice was given instead only summary of show cause in the Form DRC-01 was issued and further no personal hearing was granted to the petitioner. Thus, it is a glaring example of violation of principle of natural justice and mandatory procedure prescribed under law and as per the law laid down in the case of Magadh Sugar & Energy Ltd. Vs. State of Bihar & others reported in (2021) SCC Online Supreme Court 801, we are of the view that the writ application is maintainable.

8. Accordingly, the impugned summary of show cause notice dated 03.11.2020 issued in Form-DRC-01(Annexure-1) is quashed and set aside. Consequently the summary of order issue in Form GST DRC-07 dated 05.08.2021 (Annexure-4) and impugned order dated 04.08.2021 (Annexure-3)also cannot survive, accordingly the same is also quashed. It is made clear that this Court has not gone into merits of the case as such respondents are at liberty to initiate fresh proceeding from the stage of issuance of Show-Cause Notice in terms of Section 73 read with Rule 142(1) of the JGST Rules.

9. As a result, the instant writ application stands allowed in the manner and to the extent indicated hereinabove.