Gauhati HC: Summary in DRC-01 Cannot Replace Mandatory SCN Under GST Law

A summary of the show cause notice in GST DRC-01 is not a substitute for the actual SCN required to be issued under Section 73(1) of both the CGST Act and the SGST Act, the Gauhati High Court has ruled.

The applicant, Aman Gupta, stated that the department furnished the SCN summary on 29.11.2024 without passing any order u/s 73 (1) of the AGST Act, 2017. A hearing chance has been asked by the applicant, but without furnishing any chance of hearing, the order has been passed.

The court in Construction Catalysers Pvt. Ltd. Vs. the State of Assam and 2 others, set aside the impugned Orders-in-Original granting liberty to the respondent authorities to start de novo proceedings u/s 73, if considered appropriate for the questioned fiscal year.

The court stated that the SCN summary from the issuance date on the applicant till the date a certified copy of the instant ruling is furnished to the proper officer, should not be included while calculating the period prescribed for passing of the order under Section 73 (10) of the Central Act as well as the State Act as the case may be.

On the decision in the case of Construction Catalysers Pvt. Ltd. Vs. the State of Assam the bench of Justice Arun Dev Choudhury has relied in which it was ruled that the Summary of the SCN, the Summary of the Statement u/s 73 (3) and the Summary of the Order passed as per Section 73 (9) are to be issued in GST DRC-01, GST DCR-02 and GST DRC-07 respectively.

The issuance of summaries for the Show Cause Notice, Statement, and Order does not eliminate the requirement for a formal Show Cause Notice and Statement. Furthermore, the Order must be properly issued by the designated Proper Officer in accordance with Section 73, ensuring compliance with regulatory requirements and maintaining procedural integrity.

The Gauhati High Court determined that to enforce the provisions of Section 73, the Proper Officer needs to issue a formal Show Cause Notice, regardless of whether a summary has been provided. In its ruling to dismiss the writ petition, the court also set aside both the summary of the order and the summary of the Show Cause Notice.