State of Jharkhand vs. Sidhi Vinayak Enterprises – 2023
The department conducted a search of the petitioner’s premises in search of inappropriate ITC availment. In response to a search undertaken by the department, two Form DRC-01 summary of show cause notices were issued. The petitioner made a response, but the response was denied, and a summary order assessing tax and penalty was issued.
It filed a writ petition in opposition to the notice and order, arguing that both a show-cause notice and a summary should be issued. The department said that the petitioner engaged in the proceedings by submitting a response on Form GST DRC-06, hence there was no breach of natural justice grounds.
The Honorable High Court stated that even if the petitioner made a response, the department cannot take advantage of such action since the summary of the show-cause notice cannot be treated as a show-cause notice as required by section 74. (1). In the current instance, the procedure was marred by serious irregularities and, as such, is contradictory to section 74(1), and subsequent proceedings/challenged orders cannot vindicate the proceeding. Thus, it was determined that the summary of show cause notice issued on Form GST DRC-01 and the challenged orders were subject to reversal.
