Case Title: Merle Construction and Marketing Pvt Ltd v. State of Assam & Ors
Court: Gauhati High Court
Case No.: WP(C)/2532/2025
Date of Judgment: 26.05.2025
Category of Dispute: Natural justice in GST adjudication – absence of proper show cause notice and hearing
Relevant Provisions: Section 73(1), 73(3), 73(9), 73(10), Section 75(4), Section 2(91) of CGST Act, 2017 and corresponding State GST provisions; Rule 26(3) of CGST Rules, 2017
Facts
The petitioner, Merle Construction and Marketing Pvt Ltd, challenged an order dated 24.02.2025 passed by the Assistant Commissioner of State Tax, Goalpara, contending that the order was issued without any proper show cause notice under Section 73(1) of the CGST Act, 2017 (para 2). The company also argued that no opportunity of hearing was granted before issuance of the summary order, thereby violating Section 75(4).
Questions before the Court
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Whether the issuance of summary in Form GST DRC-01 could substitute a proper show cause notice under Section 73(1)?
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Whether the order passed without granting opportunity of hearing under Section 75(4) could stand?
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Whether the precedent in Construction Catalysers Pvt Ltd v. State of Assam applied to the present dispute?
Observations of the Court
The Court noted that in Construction Catalysers Pvt Ltd v. State of Assam (WP(C)/3912/2024, decided on 26.09.2024), it had held (para 29):
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A summary of show cause notice in Form GST DRC-01 is not a substitute for a show cause notice under Section 73(1).
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Statements of tax determination under Section 73(3) cannot replace the requirement of a proper show cause notice.
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Only the “proper officer” under Section 2(91) can issue such notices and orders, which must be authenticated per Rule 26(3).
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Orders passed without giving an opportunity of hearing violate Section 75(4).
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Consequently, orders issued without complying with these requirements are bad in law and must be quashed, though liberty may be given to initiate fresh proceedings under Section 73.
The Court observed that the present case was squarely covered by the above precedent (paras 3–5).
Judgment
The Gauhati High Court set aside the impugned order dated 24.02.2025 and the summary of show cause notice dated 28.11.2024. It reiterated that summary DRC forms cannot substitute mandatory show cause notices under Section 73(1) and orders passed without hearing violate Section 75(4). However, liberty was granted to the department to initiate de novo proceedings under Section 73 in accordance with law, with exclusion of limitation period as per the earlier precedent (para 5).
Tabular Summary of Referred Case
| Case Referred | Court | Ratio / Verdict |
|---|---|---|
| Construction Catalysers Pvt Ltd v. State of Assam & Ors (WP(C)/3912/2024, Gauhati HC, 26.09.2024) | Gauhati High Court | Held that summary in GST DRC forms cannot replace proper show cause notices under Section 73(1); orders without hearing under Section 75(4) are invalid; impugned orders quashed with liberty for de novo proceedings. |
Between Fine Lines
This ruling reinforces that GST authorities must strictly follow statutory procedures. Summaries in DRC forms are only supplementary and cannot replace a properly drafted and served show cause notice under Section 73(1). Businesses can challenge demands if orders are passed without a hearing. For tax officers, the judgment is a reminder to observe procedural safeguards to ensure sustainability of adjudication.
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