Gauhati HC Quashes GST Order Passed Without Proper Show Cause Notice

Case Details

• Court: Gauhati High Court (Assam, Nagaland, Mizoram & Arunachal Pradesh)

• Case No.: WP(C)/2153/2025

• Parties: M/s Ganapati Enterprise and Anr vs. State of Assam and Ors

• Date of Judgment: 25.04.2025

• Judge: Hon’ble Mr. Justice Arun Dev Choudhury

• Category: Input Tax Credit / Procedural Validity of GST Orders

• Relevant Sections: Section 73(1), 73(3), 73(9), 73(10), 75(4) of CGST/SGST Act, 2017 and Rule 26(3) of CGST Rules, 2017

Facts of the Case (Ref: Para 2, 3, 5)

• The petitioner challenged the order dated 28.04.2024 passed by the Assistant Commissioner of State Tax, Nagaon without issuing a proper Show Cause Notice under Section 73(1) of the CGST Act.

• The petitioner contended that although a Summary in DRC-01 was issued, no detailed SCN was served, and no opportunity of hearing under Section 75(4) was given.

• Both parties admitted that the issue was already settled in Construction Catalysers Pvt. Ltd. v. State of Assam (WP(C)/3912/2024, decided on 26.09.2024).

Questions in Consideration (Ref: Para 3-4)

1. Whether issuance of only a Summary in Form DRC-01 satisfies the requirement of a proper SCN under Section 73(1)?

2. Whether the order passed without giving an opportunity of hearing under Section 75(4) is sustainable?

3. Whether such proceedings can be continued or require fresh initiation?

Observations of the Court (Ref: Para 4, Para 29 of Construction Catalysers case)

• A Summary in Form DRC-01 is not a substitute for a proper SCN under Section 73(1).

• The Statement under Section 73(3) cannot replace a proper SCN.

• Only a Proper Officer as per Section 2(91) can issue SCN, statement, and order, duly authenticated under Rule 26(3).

• The impugned orders violated Section 75(4) as no hearing was provided.

• The Court set aside such orders but allowed the department liberty to initiate de novo proceedings under Section 73, excluding the time between the defective SCN and delivery of the judgment from the limitation period under Section 73(10).

Judgment of the Court (Ref: Para 5)

• The impugned order dated 28.04.2024 and summary SCN dated 13.12.2023 were set aside and quashed.

• The matter was disposed of in terms of Construction Catalysers Pvt. Ltd. decision.

• Liberty was granted to the tax authorities to initiate fresh proceedings under Section 73, if deemed fit.

Between Fine Lines (Simplified Summary)

• A summary in GST DRC-01 cannot replace a proper show cause notice.

• Orders passed without giving an opportunity of hearing are illegal.

• Gauhati HC reaffirmed its earlier ruling in Construction Catalysers Pvt. Ltd..

• Impugned orders were quashed but department allowed to restart proceedings properly.

• Limitation period stands extended for fresh action by excluding the defective proceedings period.

Summary of Referred Cases

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