Madhya Pradesh High Court
M/S Balaji Electricals vs Appellate Authority And Joint ... on 10 May, 2023
Author: Sheel Nagu
1
IN THE HIGH COURT OF MADHYA PRADESH
AT J A B A L P U R
BEFORE
HON'BLE SHRI JUSTICE SHEEL NAGU
&
HON'BLE SHRI JUSTICE HIRDESH
ON THE 10th OF MAY, 2023
WRIT PETITION No. 6119 of 2020
BETWEEN:-
M/S BALAJI ELECTRICALS THR. ITS PRO. SMT. SEETA
TAMRAKAR W/O SH. GOPAL SHARAN TAMRAKAR A/A
38 OCCUPATION PROPRIETORSHIP FIRM OFFICE AT
NEAR GANGA SCHOOL CHHATARPUR, THR. R/O
WARD NO.10 SWAMI JU MARG NEAR GANGA SAGAR
SCHOOL CHHATARPUR (MADHYA PRADESH)
.....PETITIONER
(BY SHRI KAPIL DUGGAL - ADVOCATE)
AND
APPELLATE AUTHORITY AND JOINT
1. COMMISSIONER STATE TAX SAGAR DIVISION
SAGAR (MADHYA PRADESH)
ASSISTANT COMMISSIONER STATE TAX
2. CHHATARPUR CIRCLE NEAR NAYA PANNA NAKA,
CHHATARPUR (MADHYA PRADESH)
.....RESPONDENTS
(BY SHRI DARSHAN SONI - GOVT. ADVOCATE)
This petition coming on for this day, JUSTICE SHEEL NAGU passed
the following:
ORDER
This writ petition filed under Article 226 of the Constitution of India
challenges Annexure P-2 dated 03.05.2019 and Annexure P-4 dated
30.08.2019 issued by Appellate Authority & Joint Commissioner, State Tax,
Sagar Division, respectively.
2. Principal ground of challenge to show cause notice, issued vide
Annexure P-1 dated 28.03.2019 under Section 74(1) of GST Act, is that it
does not satisfy the requirements of provision r/w Rule 142 of GST Rules.
3. Learned counsel for rival party are heard on the question of admission
and also final disposal.
4. It is the contention of counsel for the petitioner that the show cause
notice (Annexure P-1) was vague to the extent of not communicating the
relevant information and material thereby disabling the petitioner to respond
to the same, and therefore, all consequential actions of passing of order
(Annexure R-2) and dismissal of appeal vide Annexure P-4 are vitiated in
law.
4.1. Learned counsel for the petitioner has placed reliance upon decision of
the Division Bench of Jharkhand High Court (M/s Sidhi Vinayak Enterprises
Vs. The State of Jharkhand & ors) including WP(T) No.745/2021 rendered
on 14th- 15th, September 2022, the facts and circumstances of which are
similar if not identical to the facts and circumstance prevailing herein. It is
urged that show cause notice in M/s Sidhi Vinayak Enterprises (supra) was
identical to the show cause notice issued in the present case vide Annexure P-
1 to the extent of being vague and cryptic.
4.2 The Jharkhand High Court has dealt with the provisions of Section 74
and 75 of GST Act as well as Rule 142 of GST Rules. Relevant extract of the
said judgment from the Jharkhand High Court is reproduced below for ready
reference and convenience:-
"9. In view of the aforesaid facts and the settled preposition of
law, the foundation of the proceeding in both the cases suffers
from material irregularity and hence not sustainable being
contrary to Section 74(1) of the JGST Act; thus, the subsequent
proceedings/impugned Orders cannot sanctify the same.
Though, the petitioner submitted their concise reply vide letter
dated 03.10.2018; the respondent State cannot take benefit of
the said action as summary of show cause notice cannot be
considered as a show cause notice as mandated under Section
74(1) of the Act.
10. As we are of the considered view that the impugned show
cause notice in both the cases does not fulfill the ingredients of a
proper show-cause notice and thus amounts to violation of
principles of natural justice, the challenge is maintainable in
exercise of writ jurisdiction of this Court. Accordingly, the
summary of show-cause notices dated 12.09.2018 issued in
Form GST DRC-01 at Annexure-4 (in both cases), the orders
dated 14.05.2019 issued under section 74(9) of JGST Act (in
both cases) and also the final orders dated 18.10.2021 passed
after rectification at Annexure-09 (in both cases), are hereby
quashed and set aside. 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.
11. Consequently both these applications stands allowed. The
matter is remanded to the adjudicating authority to pass afresh
order in accordance with law from the stage of issuance of
proper show cause notice under Section 74(1) of the JGST Act."
5. Learned counsel for State on the other hand by referring to Return as
well as Additional Return, submits that the reply dated 25.04.2019 to the
show cause notice (Annexure P-1) gives an impression that petitioner was not
handicapped in giving any response to the show cause notice being vague.
Counsel for the State further points out that in the memo of appeal vide
Annexure P-3, the said ground of the show cause notice being vague was not
raised.
6. It is true that the petitioner has not specifically raised the said ground
before the appellate authority but the fact remains that mandatory provisions
of Section 74 of GST Act make it incumbent upon the Revenue to ensure the
show cause notice to be speaking enough to enable the assessee to respond to
the same.
6.1. Bare reading of the show cause notice (Annexure P-1) reveals that it
neither contained the material and information nor the statement containing
details of ITC transaction under question.
7.1. Section 75 of GST Act is a complete Code in itself which prescribes for
various stages for determination of wrongful utilization of ITC while
following the concept of reasonable opportunity of being heard to the
assessee. Since the Statute itself prescribes for affording reasonable
opportunity, it is incumbent upon the Revenue to afford the same and any
deficiency in that regard vitiates the end result.
8. In view of above and the following decision of the Jharkhand High
Court, this Court has no manner of doubt that the very initiation of the
proceedings by way of show cause notice (Annexure P-1) is vitiated for the
same being vague.
9. Accordingly, impugned orders Annexure P-2 dated 03.05.2019 and
Annexure P-4 dated 30.08.2019 and the show cause notice are quashed with a
liberty to the competent authority to proceed in the matter in accordance with
law, if so advised.
Writ petition stands allowed.
(Sheel Nagu) (Hirdesh)
Judge Judge
vibha Digitally signed by VIBHA PACHORI
VIBHA
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PRADESH, ou=HIGH COURT OF MADHYA
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PACHORI
, postalCode=482001, st=Madhya Pradesh,
serialNumber=ECF1C4B9939647F806353FB
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Date: 2023.05.13 13:21:02 +05'30'
