Hrd Commercial Industrial Security ... vs The State Of Assam And 2 Ors
2026 Latest Caselaw 2165 Gua

Gauhati High Court

Hrd Commercial Industrial Security ... vs The State Of Assam And 2 Ors on 13 March, 2026

Author: Sanjay Kumar Medhi

Bench: Sanjay Kumar Medhi

                                                                Page No.# 1/8

GAHC010004752026




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                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                            Case No. : WP(C)/1122/2026

         HRD COMMERCIAL INDUSTRIAL SECURITY FORCE PRIVATE LIMITED
         A PRIVATE LIMITED COMPANY
         REPRESENTED BY ONE OF ITS DIRECTORS NAMELY SRI SUHEL AHMED
         HAVING ITS REGISTERED ADDRESS AT S.T. ROAD
         NEAR MARUTI CAR PLAZA
         BADARPUR
         KARIMGANJ
         ASSAM
         PIN-788803


          VERSUS

         THE STATE OF ASSAM AND 2 ORS.
         REPRESENTED BY THE COMMISSIONER SECRETARY TO GOVERNMENT OF
         ASSAM
         DEPARTMENT OF FINANCE TAXATION
         DISPUR
         ASSAM.

         2:THE PRINCIPAL COMMISSIONER
          STATE TAX

         KAR BHAWAN
         G.S. ROAD
         DISPUR
         GUWAHATI-781006.

          3:THE ASSISTANT COMMISSIONER
          OF STATE TAX

         KAR BHAWAN
         G.S. ROAD
         DISPUR
                                                                             Page No.# 2/8

             GUWAHATI-781006.
             ------------
             Advocate for : MR. D SARAF
             Advocate for : SC
             FINANCE AND TAXATION appearing for THE STATE OF ASSAM AND 2 ORS.



                                  BEFORE
                 HONOURABLE MR. JUSTICE SANJAY KUMAR MEDHI

                                        ORDER

13.03.2026 Heard Shri R.S. Mishra, learned counsel appearing on behalf of the petitioner. Also heard Shri B. Chowdhury, the learned Standing Counsel of the Finance and Taxation Department of the Government of Assam.

2. Before dealing with the issue involved, the brief facts of the case may be put in a nutshell.

3. The petitioner was issued a Summary of Show Cause dated 24.09.2025 in GST DRC-01 for the tax period from April, 2021 - March, 2022 along with an attachment as regards the determination of tax. It is the case of the petitioner that as there was no proper Show Cause Notice attached to the Summary of the Show Cause Notice dated 24.09.2025 in the portal, the petitioner did not submit any reply. Subsequent thereto, an order was passed on 26.11.2025 in GST DRC-07.

4. Shri Mishra, the learning counsel appearing on behalf of the petitioner submitted that it is the requirement in terms of Rule 142 of the Central Goods and Services Tax Rules, 2017 (for short, 'the Rules of 2017') that the notice under Section 74 has to be issued and a summary thereof is to be additionally issued electronically in Form GST DRC-01. The learned counsel for the petitioner submitted that under no circumstances the attachment to the GST DRC-01 can be said to be a Show Cause Notice inasmuch as in the said attachment, there is no mention that the petitioner is required to show cause.

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5. He has submitted that even in a case where an adverse decision is contemplated to be passed, there is a requirement for providing an opportunity of hearing irrespective of whether the petitioner seek such an opportunity. By referring to the Summary of the Show Cause Notice issued in GST DRC-01, he has submitted that there is no mention whatsoever about the date of hearing and the Column had been left blank. He submitted that use of the word 'or' in Section 75(4) of the Central Act as well as State Act in between the words 'when a request is received in writing from the person chargeable with tax or penalty' and 'where any adverse decision is contemplated against such person' clearly shows the legislative intent to the effect that irrespective of a request made or not but when an adverse decision is contemplated an opportunity for hearing is mandated. The learned counsel has referred to the judgment of the Division Bench of the Hon'ble Chhattisgarh High Court in the case of Mahindra & Mahindra Limited vs. Union of India and Others, (WA No.172/2024) dated 10.04.2024 wherein after dealing with the scope and ambit of Section 75 (4) of the Central Act, it was observed that when the statute contains a mandate of hearing which is a requirement of natural justice, it cannot be given a go by. He has therefore submitted that in the instant cases as the impugned orders have been passed without giving a proper opportunity of hearing as mandated under Section 75 (4) of both the Central Act as well as the State Act, the impugned orders are liable to be interfered with.

6. Per contra, Shri Chowdhury, the learned Standing Counsel, Finance and Taxation Department of the Government of Assam submitted that the respondent authorities have issued the Summary of the Show Cause Notice in Form DRC-01 which was accompanied by the determination of tax which as per the respondents would have provided all the details so that the petitioner could have submitted the reply. The learned counsel, however, fairly submitted that there is no separate Show Cause Notice apart from the determination of tax enclosed to the Summary of the Show Cause Notice.

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7. Shri B. Chowdhury, learned Standing Counsel has however submitted that though notices were served, the petitioners had deliberately evaded the said notices. The aforesaid submission has however been disputed by Shri Mishra, learned counsel for the petitioner by submitting that at no point of time the notice has been issued.

8. From the materials on record as well as the submissions advanced, the following issues will arise for determination.

(i) Whether Show Cause Notices were issued prior to passing the Impugned Order under Section 74 (9) of the State Act?

(ii) Whether the determination of tax as well as the Order attached to the Summary of the Show Cause Notice in GST DCR-01 and Summary of the Order in GST DCR-07 can be said to be the Show Cause Notice and Order respectively?

(iii) Whether the impugned orders under Section 74 (9) of the State Act is in conformity with Section 75(4) of the State Act and is in consonance with the principles of natural justice?

9. The records show that in GST DRC-01 issued to the petitioner, it is stated that a Show Cause Notice is attached. The respondents claim that the attached document which includes the tax determination, constitutes the SCN. The core issue is whether such an attachment qualifies as a valid SCN under the Central and State GST Acts and their respective Rules. Notably, all the SCN summaries were issued under Section 74. Section 74 would show that the said provision is set into motion when it appears to the Proper Officer that:-

(a) Any tax has not been paid; or

(b) Any tax short paid; or

(c) Any tax erroneously refunded; or

(d) Where input tax credit had been wrongly availed or utilized, by reason of fraud or any willful misstatement or suppression of facts to evade tax.

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10. Considering that it is only in the circumstances referred to above, the Proper Officer is mandated to issue a SCN only under specific circumstances as outlined in Section 74. Therefore, the SCN must clearly state the reasons and circumstances justifying its issuance under this section. Only then can the recipient effectively respond, particularly if they wish to challenge the applicability of Section 74. Section 74(9) requires the Proper Officer to determine the tax, interest, and penalty after considering the representation. Section 74 (2) and 74 (10) are interconnected, while Section 74 (10) allows passing the order within three years from the due date of the annual return, Section 74 (2) mandates that the SCN must be issued at least three months before the deadline. Furthermore, a combined reading of subsections (1) to (4) of Section 74 shows that the legislature has made a clear distinction between a Show Cause Notice and a Statement. Even if a Statement is issued under Section 74 (3), a separate and proper SCN is still required.

11. It may be noted that in Section 74, there is no mention of issuance of a Summary of Show Cause Notice. The requirement of issuance of a Summary of the Show Cause Notice is seen in Rule 142 of the Rules of 2017 which reads as follows:-

"142. Notice and order for demand of amounts payable under the Act.-

(1) The proper officer shall serve, along with the

(a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC01,

(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable."

12. From a perusal of the above quoted Rule, it would show that in addition to the Show Cause Notice to be issued under Section 74 (1) and the Statement of Page No.# 6/8

determination of tax under Section 74 (3), there is an additional requirement of issuance of a Summary of the Show Cause Notice in GST DRC-01 and the Summary of the Statement in GST DRC-02. The natural corollary from the above analysis is that the issuance of the Show Cause Notice and the Statement of determination of tax by the Proper Officer are mandatory requirement in addition to the Summary of Show Cause Notice in GST DRC-01 and Summary of the Statement in GST DRC-02.

13. The Division Bench of the Hon'ble Jharkhand High Court in Nkas Services Pvt. Ltd. (supra) held that a summary in GST DRC-01 cannot replace a proper SCN. Similarly, in LC Infra Projects Pvt. Ltd. (supra), the Honble Karnataka High Court emphasized that issuing a proper SCN is essential before the recovery of interest or penalty under the Act.

14. In light of these decisions, the Court holds that merely attaching a tax determination order to the summary in DRC-01 does not amount to valid initiation under Section 74. The summary is only supplementary to a full SCN. Thus, the impugned orders, having been passed without a proper SCN, are in violation of Section 74and Rule 142(1)(a).

15. This brings this Court to the issue as to whether the determination of tax as well as the order attached to the Summary to the Show Cause Notice in GST DRC-01 and the Summary of the Order in GST DRC-07 can be said to be the Show Case Notice and Order respectively.

16. Earlier, the Court clarified that a Statement under Section 74 (3) cannot substitute a SCN under Section 74 (1). Therefore, the respondent's claim that the statement attached to the Summary in GST DRC-01 constitutes a valid SCN is misconceived and contrary to law.

17. On the question of whether the impugned orders under Section 74 (9) conform to Section 75(4) of the State Act and is according to the principles of natural justice, the Court observed that the Summary of the Show Cause Notice did not mention any Page No.# 7/8

date of hearing, leaving the relevant column blank. The petitioner was merely asked to submit a reply, without being offered a cleared opportunity for personal hearing.

18. Section 75(4) of both the Central and State GST Acts mandates that an opportunity of hearing must be granted when a written request is made by the person chargeable with tax or penalty, or when any adverse decision is contemplated against such person. This provision serves as a safeguard for assessees, ensuring procedural fairness.

19. The Division Bench of the Hon'ble Chhattisgarh High Court in the case of Mahindra & Mahindra Ltd. (supra) reinforced this by holding that where a statute mandates a hearing, it must be granted, and failure to do so renders the provision ineffective and violative of natural justice. Accordingly, the Court held that non- compliance with Section 75(4) in the present case violates both statutory requirements and principles of natural justice, thereby vitiating the impugned order.

20. In this case, FORM GST DRC-01 attached to the writ petition includes fields for the reply submission date, date and time of personal hearing, and venue. However, in the Summary of the SCN, only the reply date was filled, while the rest were marked as "NA". The Proper Officer may have presumed that a personal hearing was only necessary if the notice explicitly requested it in their reply. However, the Court clarified the even when no reply is filed, the second limb of the Section 75(4) still applies, i.e., if an adverse decision is contemplated, a hearing must be granted.

21. Failing to provide such a hearing renders the second part of Section 75(4) meaningless, and thus, passing an adverse order without a hearing in such circumstances violated both the statutory mandate and the principles of natural justice.

22. This Court, upon detailed analysis, hold that the Summary of the SCN issued in FORM GST DRC-01 does not substitute the proper SCN required under Section 74 (1) of both the Central and State GST Acts. A formal and duly authenticated SCN is Page No.# 8/8

mandatorily required to initiate proceedings under Section 74. The Statement of tax determination under Section 74 (3), which is attached to the summary in the present case cannot be treated as a valid SCN. Therefore, initiating proceedings solely based on such a statement is not in conformity with law.

23. This Court has also noted that the impugned order contravenes Section 75(4) of the Act which mandates that a reasonable opportunity of hearing must be provided either when an adverse decision is contemplated or when a written request is made by the assessee. In the present case, although the DRC-01 summary specifies the date for filing a reply, it leaves the field regarding the date and time of personal hearing as "NA". In a situation where no reply is submitted, the Proper Officer cannot proceed to pass an adverse order without granting an opportunity of hearing, as doing so would render the safeguards under Section 75(4) ineffective and violate principles of natural justice.

24. Accordingly, the impugned order dated 26.11.2025 is interfered with and set aside. However, as it appears that the respondents have proceeded under the mistaken impression that attaching the determination of tax to the summary constitutes a valid Show Cause Notice, the Court grants them liberty to initiate de novo proceedings under Section 74, if considered appropriate. To enable this, the Court directs that the period between the issuance of the Summary of the Show Cause Notice and the date when a certified copy of this judgment is served upon the Proper Officer be excluded from the computation of the limitation period under Section 74 (10) of the Act.

25. Writ petition accordingly stands allowed in the manner indicated above.

JUDGE

Comparing Assistant