Ex-Parte Demand order passed without giving opportunity to file the submission is bad in law.

Case Title: Ravi Enterprises v. Commissioner of State Tax

Court: High Court of Uttarakhand

Petition Number: Writ Petition (M/S) No. 141 of 2023

Date of Judgment: February 23, 2023

Relevant Section: Section 73(1) & 73(9) of the Uttarakhand GST/CGST Act, 2017; Rule 142(1A) & 142(2A) of CGST Rules, 2017

Category of Dispute: Adjudication without proper notice – Violation of Natural Justice

Facts of the Case

[Para 2-4]

• The petitioner, a GST-registered entity, challenged an ex-parte assessment order dated 28.06.2022 issued under Section 73(9) of the GST Act demanding ₹8,03,939.46 with interest and penalty.
• It was contended that Form GST DRC-01A (intimation) and the show cause notice under Section 73(1) were uploaded on the same date, i.e., 10.05.2022.
• The petitioner argued that this denied him the opportunity to respond in Part B of Form GST DRC-01A, as mandated by Rule 142(1A) and 142(2A) of the CGST Rules, 2017.

Question(s) in Consideration

[Para 4-5]

• Whether simultaneous uploading of Form GST DRC-01A and the show cause notice under Section 73(1) vitiates the proceedings?
• Whether denial of opportunity to respond to the intimation violates principles of natural justice and statutory requirements under Rule 142 of the CGST Rules?

Observations of the Court

[Para 5-6]

• The scheme of Rule 142(1A) & (2A) requires prior communication of the liability through DRC-01A before issuing a show cause notice under Section 73.
• The simultaneous uploading of both the DRC-01A and the SCN deprived the petitioner of a valuable right to respond meaningfully.
• Such procedural lapse amounts to violation of the principles of natural justice.

[Para 7]

• The State did not contest the procedural lapse and conceded that a fair opportunity was not granted to the petitioner.

Judgment of the Court

[Para 8-9]

• The impugned assessment order dated 28.06.2022 was quashed.
• The matter was remanded to the Competent Authority for fresh adjudication.
• The petitioner was directed to file a reply to DRC-01A within two weeks.
• Thereafter, the Competent Authority may issue a fresh show cause notice under Section 73(1), if necessary, and complete the proceedings lawfully.

Between Fine Lines

• The High Court held that procedural fairness under GST law cannot be compromised.
• Form GST DRC-01A must precede the show cause notice to uphold natural justice.
• Simultaneous issuance renders the process void and subject to judicial interference.
• Opportunity to respond in Part B of DRC-01A is a statutory safeguard.
• Tax authorities must ensure procedural compliance even before initiating adjudication.

Summary of Referred Cases

Takeaway:

“No Show Before the Show Cause: GST Adjudication Set Aside for Breach of Pre-Notice Procedure”