SCN issued without issuance of DRC-01A Valid in Case of Complete Dispute of Tax Amount by Taxpayer.

Court Name : Allahabad High Court

Parties : Elesh Agrawal Vs Union of India

Decision Date : 31 May 2023

Judgement ref : Writ Tax No. 753 of 2023

ourt No. - 42

Case :- WRIT TAX No. - 753 of 2023

Petitioner :- Elesh Agrawal

Respondent :- Union Of India And 2 Others

Counsel for Petitioner :- Dileep Chandra Mathur

Counsel for Respondent :- A.S.G.I.,Dhananjay Awasthi,Gopal

Verma

Hon'ble Saumitra Dayal Singh,J.

Hon'ble Rajendra Kumar-IV,J.

1. Heard Sri Dileep Chandra Mathur, learned counsel for the

petitioner, Sri Dhananjay Awasthi, learned counsel for the revenue

and Sri Gopal Verma, learned counsel for the Union of India.

2. Present petition has been filed to challenge demand cum notice

to show cause no. 59/2022-23, dated 24.02.2023 issued on Form

GST DRC-01 read with Rule 142 (1) of Central GST Act, 2017.

3. Amongst other that notice is issued to the petitioner. Perusal of

the same reveals, by means of contents of paragraph-1 and 2 of

that notice, the petitioner has been required to show cause with

respect to three penalties proposed to be imposed on the petitioner

for Rs. 10,50,50,0498/-, under Section 142(1A) and Rs. 25,000/-

each under Section 142 (3) (a) and (d), respectively.

4. Submission of learned counsel for the petitioner is, present

notice has been issued prematurely, before any regular show cause

notice may have been issued in any adjudication proceedings. By

virtue of Section 74(5) of the Act, revenue authorities were bound

to allow the petitioner opportunity to pay up the alleged defaulted

amount together with penalties etc., on self assessed basis. If that

amount were to be paid by the assessee, no adjudication

proceeding may arise. Here, it has been submitted, clearly, that

opportunity has been denied, inasmuch as the show cause notice

has been issued on Form GST DRC-01 and not Form GST DRC-

01A. The issue is stated to be dealt with squarely by a Division

Bench decision of the Gujarat High Court in Agrometal Vendibles

Private Limited Vs. State of Gujarat; R/Special Civil Application

No. 6919 of 2022, dated 7.4.2022.

5. The other grievance of the petitioner is that above demand cum

notice has not been uploaded on the GST portal and that no notice

came to be served on the petitioner through electronic means.

Thus, the proceedings are stated to be premature.

6. On the other hand, learned counsel for the revenue would

submit, discrepancy in form description apart, the impugned notice

does not suffer from any defect, inasmuch as the petitioner is not

desirous of availing any opportunity to pay up defaulted amount or

any part thereof, on his own. Here, the petitioner is described to

have disputed the entire tax liability. Therefore, it has been

submitted, adjudication proceedings have become necessary. At

present, no real prejudice has been caused to the petitioner for

reason of the discrepancy alleged in issuance of show cause notice

on Form GST DRC-01 in place of Form GST DRC-01A. Upon

further query made, he states, as of now, no adjudication order has

been passed.

7. As to the other submission advanced by learned counsel for the

petitioner, Sri Awasthi assures the Court that error, if any

attributable to the GST authorities, would be rectified within 48

hours such that all information required to be uploaded on the GST

portal and required to be communicated to the petitioner through

electronic means, would be so uploaded and communicated, in

accordance with law. Sri Awasthi further assures that the entire

proceedings shall henceforth be carried out after complying with

all provision and rules made thereunder.

8. Having heard learned counsel for the parties and perused the

record, while it is true that revenue authorities must give

reasonable opportunity of hearing in adjudication proceedings, and

further preliminary notice may be issued not on Form GST DRC-

01 but on Form GST DRC-01A, as that is the prescribed form, at

the same time, in the context of the present facts, that objection

appears to be hyper technical and not real.

9. On pointed query, Sri Mathur states that in the present case, the

petitioner is disputing the entire amount of penalty proposed to be

imposed. Clearly, the petitioner does not admit any fact allegations

being levelled against him. Therefore, the requirement of

preliminary notice has largely been rendered formal. If issuance of

such notice would not have served any benefit to the assessee, it

would be futile on the part of the writ-Court to enforce on the

revenue authorities fulfilment of that condition, in the present case,

at this stage. No real prejudice has been caused to the petitioner.

10. Then, there is a material fact distinction in Agrometal

Vendibles Private Limited (supra) and the present case. There, not

only the first notice had been issued on Form GST DRC-01 but the

authority chose to create a firm demand of tax and penalty. That

has been duly extracted in the order of the Gujarat High Court.

There exists no doubt as to its absence in the present case. No such

firm demand has been created. Recitals contained in the notice

clearly indicate, at present, the petitioner has been required to

show cause, why such demand may not be created. Mere mention

of wrong form number, without anything more, may not be fatal to

the proceedings.

11. In view of the above, no good ground is made out to offer any

interference on merits, in exercise of extra-ordinary jurisdiction

under Article 226 of the Constitution of India. Thus, prayer made

in the writ petition is declined.

12. At the same time, to ensure that the interest of justice is met,

considering the entirety of the submission advanced by the learned

counsel for the petitioner and as prayed by learned counsel for the

petitioner, a month's time is granted to the petitioner, to file reply

to the show cause notice.

13. Accordingly, the writ petition is disposed of with the direction,

the petitioner may file reply to the impugned show cause notice

within a period of one month i.e. not later than 30.06.2023.

14. In the meanwhile, the revenue authorities will ensure that all

documents required to be uploaded on the GST portal and required

to be communicated to the petitioner through electronic mode may

be uploaded and communicated within 48 hours. Also, the revenue

authorities shall ensure that such communication channels are

maintained and all communications pertaining to the pending

proceedings are served through electronic mode, and the

proceedings are conducted and concluded, in accordance with law.

Order Date :- 31.5.2023

SA

(Rajendra Kumar-IV, J.) (S. D. Singh, J.)