HC Rules Issuance of Proper SCN Necessary before Initiating Proceedings

Case Details: Vishkarma Industries v. State of Jharkhand - [2023] 150 taxmann.com 140 (Jharkhand)

Judiciary and Counsel Details

• • Aparesh Kumar Singh and Deepak Roshan, JJ. 
  • Sumeet Gadodia, Ranjeet Kushwaha and Aakansha Mittal, Advs. for the Petitioner. 
  • Sachin Kumar, A.A.G-II and Ratnesh Kumar, Sr. S.C. (DGGI) for the Appellant.

Facts of the Case

The proceedings were initiated by the GST department against the petitioner for wrongful availment of ITC and passing benefits of fake ITC to other entities. It filed writ petition to challenge the proceedings and contended that no proper show cause as contemplated under section 74(1) was issued and instead only summary of a show cause was issued.

High Court Held

The Honorable High Court noted that a summary of a show cause cannot be a substitute of a proper show cause notice and such substitution would entail violation of principles of natural justice. Moreover, in the instant case, the documents which formed basis of passing of impugned order were not supplied to the petitioner.

The Court also noted that in absence of clear charges based upon which a person is required to answer, proper opportunity to defend itself stands denied. Therefore, it was held that the impugned show cause summary and adjudication orders were to be quashed and liberty was granted proper officer to initiate fresh proceeding by issuing a proper show cause notice.