Jharkhand HC Cancels GST Notice as 100% Penalty Via DRC-07 Not Valid

Recently, the Show Cause Notice (SCN) and Demand Order have been rejected by the Jharkhand High Court. It was against the petitioner because, in Form GST DRC-07, there is a pointless order of a fine of 100% of GST.

On the basis of a claimed discrepancy in the GST returns and GSTR-2A, the actions, resultant show cause notice, summary of show cause notice, and demand order were provided for some time.

These proceedings were claimed because of a discrepancy in GSTR-3B and GSTR-2A for the relevant period and that the petitioners had taken undue ITC to which they were not entitled, according to the advocate of the petitioners, Deepak Kr Sinha. The show cause notice does not cancel the relevant particulars and does not even set forth the violation to which the petitioners have been called upon to respond.

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Deepak Kr. Dubey disapproved the claims and argued that the alternative option of an appeal according to section 107 of the 2017 Act has already been maintained. The GSTN allows for a uniform framework in which only notices can be sent to the assessee, which is the common point of view in both of these counter affidavits.

Thus, following protocol, the Deputy Commissioner of State Tax, Godda Circle, Godda, has mentioned the breach and charges posed against the petitioner, i.e., the distinction between GSTR-3B and 2A.

The judges noted that the notices under Section 73(1) of the Act of 2017 at Annexure-2 in the relevant writ petitions are in the standard format and that neither particulars have been omitted nor specific violations have been identified to enable the petitioners to properly respond and defend themselves.

Justice Aparesh Kumar Singh and Justice Deepak Roshan, who made up the division bench, noted that it is also against Section 73(9) of the Act of 2017, which states that the proper officer may only levy a penalty of up to 10% of tax dues when passing an adjudication order, to impose a penalty of 100% of tax dues as shown in the summary of the order contained in Form GST DRC-07, via Annexure-4, in the respective writ petitions. The aforementioned flaw amply demonstrates the Deputy Commissioner of State Tax, Godda Circle, and Godda’s lack of application of mind.

It was further learned that the proceedings were also impacted by a breach of the principles of natural justice and the procedure described under Section 73 of the Goods and Services Tax Act.