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Hon'ble Judges:

RAJIV SHAKDHER
TARA VITASTA GANJU
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COUNSEL
Vineet Bhatia
COUNSEL
Harpreet Singh
Suhani Mathur

Pre show cause consultation is a mandatory condition before issuing show cause notice: High Court

Petitioner's voluntary statement cannot substitute a statutory notice, which is contemplated under Rule 142(1A) of the 2017 Rules: Says High Court

High Court held:

The revenue argument that pre-show cause notice could not be issued because it was not available on GST portal is not sustainable. Revenue could have made an attempt to serve it manually.

The second argument of revenue that, what all revenue would have said in the pre-show cause consultation notice was put forward to the petitioner at the time of recording his statement, is also not not tenable. 

A voluntary statement cannot substitute a statutory notice, which is contemplated under Rule 142(1A) of the 2017 Rules.

Petitioner:

This writ petition is directed against the show cause notice dated 21.05.2020, issued by the revenue stating as to why- 

Tax of IGST of Rs. 58,77,631/-, CGST of Rs. 53,57,374/-, SGST of Rs. 53,57,374/- & Cess of Rs. 5,44,45,143/- should not be recovered along with interest & penalty.

The petitioner has assailed the show cause notice on the ground that the mandatory requirement of pre-show cause notice consultation, as embedded in Rule 142 (1A) of the CGST Rules has not been adhered to.

Mr. Bhatia contends that, as a matter of fact, the regime after the CGST Act and Rules kicked in i.e., from 01.07.2017 had left no scope for the respondents/revenue to move away from the requirement of a pre-show cause consultation notice.

Mr. Bhatia has also referred to a statutory form i.e., GST DRC-01A. Mr. Bhatia contends that a brief perusal of the form i.e., GST DRC-01A, would show that the respondents/revenue were required to not only crystalize the tax and cess components, but also the period for which it was claimed.

Besides this, Mr. Bhatia also emphasised the fact that a perusal of the aforementioned form would show that the respondents/revenue are also required to “furnish the grounds” and the “quantification” of the goods/services, based on which tax and cess is claimed.

Revenue:

Mr. Harpreet Singh, who appears on behalf of the respondents/revenue, says at the relevant point in time i.e., when the impugned show cause notice dated 21.05.2020 was issued, the statutory form referred to hereinabove was not activated on the web portal.

It is therefore Mr. Singh’s contention that it is on account of this reason that a pre-show cause consultation notice could not be issued to the petitioner.

That said, Mr. Singh says that because the authorised signatory of the petitioner proprietorship concern gave a voluntary statement before the concerned officer, it obviated the need for issuing a pre-show cause consultation notice.

In other words, the argument is that everything that the pre-show cause consultation notice would envisage, was captured in the voluntary statement given by the aforementioned authorized signatory of the petitioner concern i.e., Mr. Tarun Gulati.

Held:

Insofar as the arguments advanced by Mr. Singh are concerned, we are of the opinion that these arguments cannot save the day for the respondents/revenue.

The first argument was that since the aforementioned statutory form was not activated on the web portal maintained by the respondents/revenue, pre-show cause notice consultation notice could not have been issued. As is rightly argued by Mr Bhatia, the respondents/revenue could have made an attempt by serving on the petitioner, albeit manually, the very same statutory form.

The other argument advanced by Mr. Singh that because the authorised signatory of the petitioner i.e., Mr Tarun Gulati had made a voluntary statement, the requirement of issuing a pre- show cause consultation notice stood satisfied, as all that the respondents/revenue would have said in the pre-show cause consultation notice was put to the authorised signatory petitioner proprietorship concern at the time of recording his statement, is untenable. 

A voluntary statement cannot substitute a statutory notice, which is contemplated under Rule 142(1A) of the 2017 Rules.

The impugned show cause notice is set aside.

 


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Author:

TaxReply


May 30, 2022

Comments


PLS GIVE THE FULL ORDER AND TELL THE NAME OF THE HON'BLE HIGH COURT AND CASE NO.
By: Atul Garg | Dt: May 31, 2022


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